Gallup Economic Confidence Index plunges while stock market near record: Stock Market decoupled from financial well being of average Americans.
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Gallup releases an Economic Confidence Index which should reflect the overall sentiment of Americans as it pertains to the economy. With the stock market near record highs and the housing bubble market soaring, you would expect average Americans to be smiling from ear to ear with glee. But when you click on over to Gallup, the chart looks downright gloomy like finding out you just failed a midterm exam you studied so hard for. While Gallup may be stumped and scratching their head as to why this divergence is there, I feel we have touched upon a few points as to why this is occurring. First, half of Americans don’t even own one stock. Next, you have many U.S. companies making large profits abroad. Good for the company but that doesn’t translate necessarily into a better financial position for most Americans. Housing values being inflated only keeps Americans from buying as reflected in a generationally low homeownership rate. In other words, crony capitalism is working as it should.
People understand that something is rotten in Denmark
The Gallup Economic Confidence Index looks like it is taking a similar trip to Enron’s stock. People are just not happy with the economy. People don’t pay the bills with the stock market and while half the nation is playing Pokémon Go and then going to Facebook to enjoy the latest celebrity gossip a large part of America is wondering why they are flat broke. Rome had its version of distracting the public and it involved feeding gladiators to wild animals. Today we throw cute balls to virtual fuzzy animals.
Take a look at this chart:
The public does not trust the mainstream press anymore. They try to say everything is okay while it appears as if the world is becoming unglued. People have been angry for years and this is being reflected in the political climate (i.e., non-establishment candidates, Brexit, etc). The stock market is fully decoupled on how well Americans are doing overall.
The S&P 500 is up a stunning 220% since the lows reached in 2009:
Has your income gone up 220% since 2009? The market is simply in a different stratosphere and isn’t reflecting the reality that the middle class is now a minority in the United States. The story seems to be getting more common as each day passes by. A hard working family tries to replicate the life their parents had. Assuming there was a goal of the government to protect the middle class versus the heavy interests of Wall Street. Yet now it is open season on the public and the market is running as if there will never be a correction ever again. There is now this odd belief that the Fed is somehow a new secular God. Yet the public is slowly devoured like vultures at a carcass.
The metro city blues seems to be common and it is now reflected in the Gallup survey. Despite the wild ride on the stock market the public is merely a spectator to this new form of predatory capitalism. The bailouts merely cemented the banking interests deeper and now much of the housing market is in deep capture to the system. The American Dream of homeownership is now largely out of reach for many Americans.
The stock market has decoupled from middle class America. Gallup needn’t scratch their head on this one.