America’s unemployment rate is the highest it’s been since the Great Depression — and the S&P 500 is about where it was last October.
This dissonance between the stock market and real economy has raised eyebrows among some commentators and Wall Street analysts. With millions of Americans losing their jobs each week, countless small businesses trembling on the edge of bankruptcy, states and cities falling into fiscal crisis — and the prospects of the federal government implementing an effective, long-term plan for containing the coronavirus growing evermore dim — how could shares in U.S. firms possibly be worth as much as they were last autumn? Sure, stock prices are a forward-looking indicator, but why would investors see a brighter future today than they did when the U.S. was near full employment and a global pandemic was just a hypothetical that Bill Gates gave TED talks about?
And yet, if the markets’ utter detachment from present economic conditions fazes some experts, ordinary Americans are unsurprised; it’s not news to them that their fate and the S&P 500’s aren’t closely entwined.
Or so a new survey from the Federal Reserve Bank of New York suggests. Since 2013, the central bank has been routinely surveying Americans about their expectations for the coming 12 months. In the latest edition of that poll, Americans expressed record-high optimism about the stock market — and record-high pessimism about their future earnings and spending.
For the first time in the survey’s history, Americans put better than 50-50 odds on stock prices being higher next year than they are now. Nevertheless, 32 percent of respondents said they expect their own financial circumstances to be worse in 12 months than they are now, the highest that figure has ever been.
From one angle, this result looks pretty intuitive. The survey was taken in April, at a time when stocks were rallying and unemployment was soaring. So it’s likely that respondents were merely extrapolating from current trends. That said, the results indicate that awareness of those disparate trends is broader than one might have guessed. A great many Americans now recognize that workers and shareholders do not necessarily have similar interests. That presents an opportunity for the U.S. left, if it can find a way to give the public’s latent class consciousness ideological definition and political salience.
