6 ms·

Ask HN: Why is stock market booming when the economy is struggling?

13 points by imheretolearn 5y ago

loofatoofa 5y ago
income inequality in action.
cloudking 5y ago
The fed, "quantitative easing" (aka money printing), zero % interest rates, resulting inflation in asset prices (stocks, crypto, housing etc).
Finnucane 5y ago
Because the stock market is not the economy. Much of the gain in the s&p 500 has been from companies that benefitted from the quarantines—Apple, Amazon, etc.
- donsupreme 5y ago
  Uber's delivery business has been good but it's more even unprofitable than their ride business which has completely died. Yet their stock is up over 100% since pandemic.
andrew_v4 5y ago
The valuations are in part a leading indicator of inflation, as governments print money. It's no good having cash, buy a stream of inflation adjusted revenue. Also whatever the opposite of trickle down economics is. As more concentrated wealth chases investment opportunities, prices go up.
- alisonkisk 5y ago
  That's what trickle down economics is, definitionally: money being poured on wealthy people to spend.
  - andrew_v4 5y ago
    What I had in mind was money being given to the masses through covid related benefits and then quickly concentrating into the hands of a few.
drstewart 5y ago
Is the economy struggling? Everything is seeing unprecedented consumer demand: from housing to bicycles to video games, demand is outstripping supply.
- agent008t 5y ago
  Is demand outstripping supply not the definition of the economy struggling? The goal of the economy is to create plentiful supply of what people demand, is it not?
zoshi 5y ago
Is the economy struggling? Consumer spending has completely rebounded to previous levels: https://tradingeconomics.com/united-states/consumer-spending https://tradingeconomics.com/united-states/consumer-spending Manufacturing output has also completely rebounded: https://fred.stlouisfed.org/series/OUTMS https://fred.stlouisfed.org/series/OUTMS Unemployment has fallen back to 6%, near prepandemic levels https://tradingeconomics.com/united-states/unemployment-rate https://tradingeconomics.com/united-states/unemployment-rate And the technology sector never really slowed down. Many tech companies experienced high growth during 2020.
runawaybottle 5y ago
There’s no appetite for global war and China is about to become the largest economy. Most of the world is entering the consumer space via technology. There’s a lot of people, and we’ve identified what everyone worldwide wants to buy (electric cars, gadgets, games, movies, food). Every market is just going to get huge, so I really don’t see what the argument is for ‘main street’ to be struggling. The major concern is during this boom the robber barons will take an uncharitable share of the wealth and accumulate it at the top, but the overall global economy is more than signaling it’s going to bust out even more.
alxmrs 5y ago
the nyts offered a good explanation for this in january [1]. the general idea is that white collar workers’ usual discretionary spending was diverted into the stock market. [1] https://www.nytimes.com/2021/01/01/upshot/why-markets-boomed-2020.html https://www.nytimes.com/2021/01/01/upshot/why-markets-boomed...

13 points by imheretolearn 5y ago

income inequality in action.

The fed, "quantitative easing" (aka money printing), zero % interest rates, resulting inflation in asset prices (stocks, crypto, housing etc).

Finnucane 5y ago

Because the stock market is not the economy. Much of the gain in the s&p 500 has been from companies that benefitted from the quarantines—Apple, Amazon, etc.

donsupreme 5y ago
Uber's delivery business has been good but it's more even unprofitable than their ride business which has completely died. Yet their stock is up over 100% since pandemic.

andrew_v4 5y ago

The valuations are in part a leading indicator of inflation, as governments print money. It's no good having cash, buy a stream of inflation adjusted revenue. Also whatever the opposite of trickle down economics is. As more concentrated wealth chases investment opportunities, prices go up.

alisonkisk 5y ago
That's what trickle down economics is, definitionally: money being poured on wealthy people to spend.
- andrew_v4 5y ago
  What I had in mind was money being given to the masses through covid related benefits and then quickly concentrating into the hands of a few.

drstewart 5y ago

Is the economy struggling? Everything is seeing unprecedented consumer demand: from housing to bicycles to video games, demand is outstripping supply.

agent008t 5y ago
Is demand outstripping supply not the definition of the economy struggling? The goal of the economy is to create plentiful supply of what people demand, is it not?

zoshi 5y ago

Is the economy struggling? Consumer spending has completely rebounded to previous levels: https://tradingeconomics.com/united-states/consumer-spending https://tradingeconomics.com/united-states/consumer-spending Manufacturing output has also completely rebounded: https://fred.stlouisfed.org/series/OUTMS https://fred.stlouisfed.org/series/OUTMS Unemployment has fallen back to 6%, near prepandemic levels https://tradingeconomics.com/united-states/unemployment-rate https://tradingeconomics.com/united-states/unemployment-rate And the technology sector never really slowed down. Many tech companies experienced high growth during 2020.

runawaybottle 5y ago

There’s no appetite for global war and China is about to become the largest economy. Most of the world is entering the consumer space via technology. There’s a lot of people, and we’ve identified what everyone worldwide wants to buy (electric cars, gadgets, games, movies, food). Every market is just going to get huge, so I really don’t see what the argument is for ‘main street’ to be struggling. The major concern is during this boom the robber barons will take an uncharitable share of the wealth and accumulate it at the top, but the overall global economy is more than signaling it’s going to bust out even more.

alxmrs 5y ago

the nyts offered a good explanation for this in january [1]. the general idea is that white collar workers’ usual discretionary spending was diverted into the stock market. [1] https://www.nytimes.com/2021/01/01/upshot/why-markets-boomed-2020.html https://www.nytimes.com/2021/01/01/upshot/why-markets-boomed...