The Stock Market Isn’t the Economy

And the Economy Isn’t the Stock Market

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I want to start off by saying nothing I’m about to say is financial advice. I am just explaining some definitions and misunderstandings that many people have about the stock market and the economy.

First, some definitions.

The DOW Jones comprises the 30 largest publicly-traded companies in America. “Publicly traded” means people can buy shares of their company on a stock market exchange. The stockholders own the company.

The S&P 500 comprises the 500 largest publicly-traded companies in America. If the DOW comprises the largest 30 companies and the S&P the largest 500 companies, you can infer that the S&P 500 is a better overall representation of the stock market.

The NASDAQ is mostly comprised of tech companies and growth-oriented companies. In 2022, the S&P 500 was down 19.44% for the year, while the NASDAQ was down 33.1%

Most companies in the US aren’t publicly traded on the stock market, as most are private.

The number of small businesses in the US in 2022 was 33.2 million, which makes up about 99.9% of US businesses.

Back to the title of this writing—the stock market is not the economy and the economy is not the stock market. 99.9% of US businesses aren’t even a part of the stock market.

I’m sure everyone remembers when the COVID lockdowns first occurred in March of 2020. The S&P 500 fell 35% in value in an extremely short time period, but most of the stock market fully recovered within six months.

Does this mean the economy fully recovered in six months? No. It means the perceived value of the 0.1% of US businesses fully recovered in six months.

How was the stock market able to recover so quickly?

Many companies represented in the stock market—tech companies especially—didn’t have to shut down their businesses during lockdowns. Their employees could work from home, and most of their services and products could be purchased and used even when the country was on near-full lockdown. Some companies like Zoom and Peloton thrived during the lockdowns, while people couldn’t meet in person and gyms were closed.

Grocery stores were allowed to remain open, and restaurants could use drive-throughs. If your restaurant didn’t have a drive-through or take-out, you were essentially unable to stay afloat.

Which restaurants tend to have drive-throughs? Publicly-traded, corporate restaurants. Which restaurants don’t tend to have drive-throughs? Privately-owned small businesses. As one can imagine, a lot of the money that was being spent at small, family-run restaurants was now going to big chain restaurants.

Grocery stores were able to remain open, while most retail stores were shut down. But, if a retail store also sold groceries, they could remain open and not only sell groceries, but retail as well.

Which stores sold groceries and retail? Target, Walmart, Costco—you get the idea here; mostly big corporate companies, part of the 0.1%.

While small private businesses were forced to shut their doors, the big corporate stores were able stay open. You couldn’t go into a small business appliance store and buy a vacuum, but you could go to a Costco to buy one, even if you weren’t buying any groceries with it. You couldn’t buy a pair of pants at a small boutique, but you could buy them at a Target. You couldn’t go into a small sporting goods store and buy a basketball, but you could buy one at a Walmart.

Businesses with an online presence not only survived during the lockdowns, but thrived. Even after the lockdowns, due to people being afraid to be in public, companies like Amazon took a huge market share away from their small brick and mortar competitors. Amazons’ competitors were essentially put out of business, and their sales were sucked up by the online retail conglomerate.

One can argue over exact figures, but, in my estimation, roughly a third of small businesses didn’t or won’t survive the COVID lockdowns and their aftermath. Some may still be suffering from the damage done and may not last much longer, especially with another downturn in the economy in progress. This means that large, corporate businesses now have an even bigger lion’s share of the market; they basically ate their competition.

Where did all those stimulus checks go?

Speaking of stimulus checks, where did they come from? They came from the Federal Reserve printing money out of nothing, who then handed them out to people whether or not they lost their jobs. I should point out that it was Trump who handed out these checks, but in my opinion, it was something he was forced to do to keep the economy and Americans afloat. What Americans did with the money was their business.

What do you get when you print money out of nothing?

Inflation.

There’s a saying, “believe half of what you see and none of what you hear.”

In this context, the “hear” part could be viewed as what we are told by the media and government. The “see” part could be viewed as how we perceive what is happening around us. Sometimes our eyes can deceive us. We can see things from an influenced and manipulated point of view.

Inflation fits into this paradigm.

We were told by the Federal Reserve in July of 2021 that inflation was not a problem, even though it went from 1.4% when Trump left office to 5.3% six months later. They said it was likely “transitory” and would quickly go away. It didn’t, and in fact got much worse.

One could observe that inflation was really bad, as gas prices were up, rent was up, food prices were up—everything was more expensive, but this may only be half true.

To combat out-of-control inflation, the Federal Reserve raises interest rates. The sole purpose of raising interest rates is to kill the economy. They raise interest rates to hurt the economy by causing higher unemployment and cut back on business expansion and profits. Essentially, they force companies to shrink.

Again, don’t believe anything you hear, from the media and government, and half of what you see. The reason you should believe half of what you see is because they manipulate that as well, through outright lies, or manipulation of the figures.

During the Summer of 2022, inflation came in at 9.1% year over year. The following month, it came in at 8.5%. At this point, Biden claimed that he had eliminated inflation. Inflation going from 9.1% to 8.5% is the equivalent of a runaway train slowing from 91mph to 85mph.

You aren’t out of danger.

In fact, inflation didn’t actually go down. They changed the way it was reported. Gas prices started to fall a bit due to Biden tapping Trump’s strategic oil reserves, and people adjusting their driving habits due to the cost associated with traveling.

With gas prices falling, they decided to start including fuel into their inflation figures, which they weren’t doing during prior months, when fuel prices were going up. The sole reason inflation went from 9.1% to 8.5% was the inclusion of fuel in these aggregated figures. Everything else was still going up.

Unemployment figures are manipulated as well. Sometimes they flat-out lie about the unemployment figures, and sometimes they manipulate or change definitions to get the results they want.

If you use your ears to hear, you hear the media and government say the unemployment levels are at record lows.

If you use your eyes to see, you see hundreds of thousands of people being laid off from high-paying tech jobs. Recently, Disney announced that they are laying off 7,000 employees. In after-hours trading, their stock went up 6%. Is this because the economy is getting better? Absolutely not; it means they are cutting costs in anticipation of a rougher economic period.

When a company here or there has to lay off employees, it can be because their competitors are putting out better products and services and they just can’t compete. It could also mean they projected badly, or their ad campaign wasn’t very successful.

When the majority of big companies are laying people off, it’s because the economy isn’t doing well, or there is a fear it will likely get worse. This is what we are currently experiencing.

You can see with your eyes that unemployment is low, but numbers lie. Unemployment figures are mischaracterized. The definition of “unemployed” can be changed from not having a job, to not actively looking for a job, to not looking for a job within the past five minutes. It can go from not currently having a job, to not having a job for a month, to not having a job for a year.

A Google executive who is now working the drive-through at a Burger King is considered employed. A guy who takes a second job to survive the Biden economy can be reported as being two people with two separate jobs.

Numbers don’t tell the full story.

Much like the PCR test used to test for COVID—you know, the one that has a 95% false-positive rate—when they wanted Covid rates to appear higher, they ran more cycles on the PCR test. When they wanted rates to appear lower, they ran fewer cycles on the PCR test. This same pattern of manipulation applies to economic tools.

‘But the lines at the fast-food drive through are 40 minutes!’

While this makes it appear as if the restaurant owner can’t seem to hire enough staff to keep up with demand, is it more likely that the restaurant owner can’t afford to pay his employees $15-$20 an hour. During COVID, many fast-food restaurants learned that it is more cost effective to only allow drive-through service, no sit-down dining. This allows them to staff less employees.

Is it that hard to put a sign on the door saying, ‘we can’t find anyone to work?’

Are we to believe teenagers wanted to work for $6 an hour three years ago, but teenagers don’t want to work the same job now making $15-$20 an hour?

I’m sure there are plenty of cases where employers legitimately can’t find good help, but this isn’t always the case.

When I say the stock market isn’t the economy and vice versa, it doesn’t mean they aren’t correlated. If it looks like the economy is going get bad, the stock market usually falls. If it looks like the economy is going to get better, the stock market usually goes up. But they don’t always move in lock step.

The stock market can fall a year before the economy gets noticeably bad, or it could start to move up before an economy even bottoms out. The stock market could even drop on the fear of a recession that never actually occurs. While they generally tend to move in the same direction, they aren’t the same thing.

It’s impossible to convince me that mass layoffs of highly-paid employees from big corporations should be taken as a sign that the economy is doing well. You can show me all the manipulated unemployment numbers you want; I’m not buying.

You can’t convince me that the cost of everything going up without income keeping pace is a good thing. It isn’t.

The stock market represents 0.1% of the businesses in America. When the companies that make up 0.1% of businesses in America cannibalize the other 99.9% of the businesses, I see that as a bad thing. I see it as a consolidation of power and wealth. I see it as being representative of a dying middle class. I see it as the start of a two-class system, dividing the rich from the poor.

When Biden says the economy is doing great, I ask, ‘great for who?’

I AM optimistic about the future, but that is NOT because of Biden’s ridiculous policies; it’s because I believe that, if we endure for a while longer, and if we make good, smart choices, we will likely come out the other side in better shape than we came in.

Some Americans will lose their jobs, and some may lose their houses because of the current administration. My heart goes out to these people. To anyone living their life like everything is looking rosy, throwing caution to the wind, I ask that they consider using a little more caution in their financial decisions. Maybe store a few more nuts, in case things get worse long before they get better.

To everyone reading this now, I say, may God bless and protect us all. May God give us discipline and discernment to deal with the things both within and without our control, and may God give us a cheerful heart in good times and in bad.

Because I have faith and hope that, despite these trials and tribulations, our country’s best days are yet to come.

Badlands Media articles and features represent the opinions of the contributing authors and do not necessarily represent the views of Badlands Media itself.

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