4 ms·

The stock market is not the economy.

by wokky 8y ago

Judgmentality 8y ago
How do you propose to measure economic health?
- aaavl2821 8y ago
  https://ig.ft.com/sites/numbers/economies/us https://ig.ft.com/sites/numbers/economies/us
- bunderbunder 8y ago
  Economic health in general? GDP misses some important details, but it's a much better measure than simply looking at the share prices (not even the market caps) of a small selection of companies operating in a specific sliver of the economy that was very important 100 years ago, but represents a declining fraction of overall US productivity.
  - criddell 8y ago
    GDP is awful as well. Median wages, labor participation rates, access to education and health care, etc... are all more interesting measures. If the economy is only working well for the top 20%, then it's not a very good economy no matter what the GDP and stock market says.
- wokky 8y ago
  The phrase "economic health" looks odder to me the longer I ponder it. "The economy" isn't a living creature, so the phrase is a metaphor, and different people are likely to have very different ways of interpreting it, according to their own interests and concerns. A hedge fund manager, a real estate magnate, and an unemployed single parent will have very different ideas about what is important for "economic health." You could probably do worse than to start with actual human health, though. Even if your goal is something narrow, like the opportunity to personally accumulate money through speculation, a high average level of human health is a great foundation for that kind of growth. Of course, if you accept all that, the news is again very ominous.
- maxsilver 8y ago
  I'm not an economist, but: One way might be to measure average incomes against cost of living. The economy is healthy if the majority of incomes are going up faster than the costs of living are. Another might be the percentage of adults who are collecting incomes, based against the average of incomes. (Effectively, a more accurate unemployment figure). Another way might be to measure the average amount of savings individuals hold. Or, their assets, excluding homes and automobiles. --- I would propose that the stock market is probably the worst way to measure economic health. Because the vast majority of the population owns no stock themselves but must be customers of these companies, so the vast majority of the population only suffers when stocks price changes for any reason (both when it goes up, and when it goes down).
darkerside 8y ago
I didn't say it was. I'm just searching for any kind of value from predicting a recession with such a coarse grained level of precision. I think it's a ridiculous claim.

The stock market is not the economy.

by wokky 8y ago

The stock market is not the economy.

Judgmentality 8y ago

How do you propose to measure economic health?

aaavl2821 8y ago
https://ig.ft.com/sites/numbers/economies/us https://ig.ft.com/sites/numbers/economies/us
bunderbunder 8y ago
Economic health in general? GDP misses some important details, but it's a much better measure than simply looking at the share prices (not even the market caps) of a small selection of companies operating in a specific sliver of the economy that was very important 100 years ago, but represents a declining fraction of overall US productivity.
- criddell 8y ago
  GDP is awful as well. Median wages, labor participation rates, access to education and health care, etc... are all more interesting measures. If the economy is only working well for the top 20%, then it's not a very good economy no matter what the GDP and stock market says.
wokky 8y ago
The phrase "economic health" looks odder to me the longer I ponder it. "The economy" isn't a living creature, so the phrase is a metaphor, and different people are likely to have very different ways of interpreting it, according to their own interests and concerns. A hedge fund manager, a real estate magnate, and an unemployed single parent will have very different ideas about what is important for "economic health." You could probably do worse than to start with actual human health, though. Even if your goal is something narrow, like the opportunity to personally accumulate money through speculation, a high average level of human health is a great foundation for that kind of growth. Of course, if you accept all that, the news is again very ominous.
maxsilver 8y ago
I'm not an economist, but: One way might be to measure average incomes against cost of living. The economy is healthy if the majority of incomes are going up faster than the costs of living are. Another might be the percentage of adults who are collecting incomes, based against the average of incomes. (Effectively, a more accurate unemployment figure). Another way might be to measure the average amount of savings individuals hold. Or, their assets, excluding homes and automobiles. --- I would propose that the stock market is probably the worst way to measure economic health. Because the vast majority of the population owns no stock themselves but must be customers of these companies, so the vast majority of the population only suffers when stocks price changes for any reason (both when it goes up, and when it goes down).

darkerside 8y ago

I didn't say it was. I'm just searching for any kind of value from predicting a recession with such a coarse grained level of precision. I think it's a ridiculous claim.