It happens every election season, and both sides do it- using the stock market as a political football and spinning the state of the indices to their advantage. It’s very important to remember that the stock market is NOT “the economy,” despite what the politicians and the political pundits on their sides try to tell us.
If the stock market is up, as it is now, the party in power will try to convince you that Wall Street’s gains are good for Main Street. This is why then President Donald Trump incessantly tweeted about stock market gains and geared his actions towards trying to do whatever his party believed satisfied the Dow Jones Industrial Average.
Buying and selling stock always has an element of risk, just like gambling. Buying and selling stock online is like making bets on CasinoHEX Indian website. Sometimes you win, sometimes you lose. And big brokerage houses like Charles Schwab, Edward Jones, TD Ameritrade and Wells Fargo…well, they’re not really all that different from any of the brightly lighted, oversized casino hotels you see in Las Vegas or Atlantic City.
And just like how the house always wins in Vegas, it’s the Wall St. insiders who always come out ahead when it comes to the so-called concept of “playing the market.”
As the saying goes, position is 9/10 of the law, and the top of the economic food chain already has the cards, in this game, dealt out to their favor.
The top 1% of net worth Americans own 1/2 the total valuation of all stock held by individual households. The top 10% own 88% of the market’s value. In fact, 47% of Americans don’t even own a single share of stock.
Which again speaks to why the market fluctuations mean nothing at all to most of the country. Forget all the propaganda about “trickle down” economics and “job creators.” Employment statistics don’t relate to the stock market indices either. For instance, we lost 20.5 million jobs in April 2021, the first full month of the shutdown economy.
No matter what party is in power, all the numbers and statistics will be manipulated and spun to benefit the status quo. This will only increase as we ramp up towards the midterm election in November.
Actually, the spin, not just for the 2022 midterms but also the 2024 Presidential election, has already begun.
Meanwhile May 2021 saw the S&P 500 reach a three year high. “The economy” itself is defined by general economic activity, often reflected by GDP or gross domestic product. The working definition of a recession is two consecutive quarters of negative economic growth as measured by GDP.
The NBER officially declared an end to the last economic expansion before COVID in February of 2020 as the U.S. fell into a recession amid the pandemic. In addition to recession and expansion, there are two more economic phases to complete the cycle.
Not to be all Econ 101 on you all, but a slowdown is defined by a period in which GDP growth slows but does not actually decline. Finally, a recovery is generally characterized by a sustained period of improving business activity, following a recession and preluding an expansion.
Again, none of these are defined by the DJIA numbers in the stock market!
Paul M. Banks is the owner/manager of The Bank (TheSportsBank.Net) and author of “Transatlantic Passage: How the English Premier League Redefined Soccer in America,” as well as “No, I Can’t Get You Free Tickets: Lessons Learned From a Life in the Sports Media Industry.”
He has regularly appeared in WGN, Sports Illustrated and the Chicago Tribune, and he co-hosts the After Extra Time podcast, part of Edge of the Crowd Network. Follow him and the website on Twitter and Instagram.