By Matt Moreno
For many Americans, there’s a belief that the current economy is connected to the stock market. Those who believe this say that however the market fluctuates, the U.S economy will follow suit. While there are some connections between the two, the truth is the stock market only plays a small part of the shift in economy.
“People need to know that there’s a lot more when it comes to the economy,” said Eric Morrow, an economics professor at Tarleton State University.
According to Morrow, factors such as trade, retail, production, and of course supply and demand take a great account of the U.S Economy. As for the stock market, its primary goal is to work within each company to build more and more. While the stock market has public interest to work off of, the economy has to work around unplanned factors.
Now take into account the COVID-19 Pandemic, and you see the economy and stock market go down. However, for the stock market, it began to raise up again. Morrow says that this is due in part to the specific businesses that are profiting off of it. Hospitals and companies who sell cleaning products are the ones gaining more from the pandemic.
Which is why the market going up over five percent in September. Now with the rise in coronavirus cases in the United States, the stock market is falling back down. This last week the DOJ and S&P reported that the DOW went down more than three percent, the worst it’s been since the beginning of the pandemic.
“When the stock market goes down, people start to notice,” Morrow says. To Americans the fall of the market could signal potential struggles in the economy. While it doesn’t guarantee it, it definitely is one of the warning signs toward economic hardship.
With the 2020 election coming closer, both the stock market and the economy could change if a new party goes into office. Morrow says, “the market is almost at a pause,” leading up to election day. There’s a chance of it changing if someone new comes in, because there will be new focuses in both the market and the economy