archivethinking

"The stock market is not the economy" is a common refrain. The thinking goes that while losses in the stock market may hurt Wall Street investors, Main Street is the real backbone of the economy. While that may be true, stocks are an important psychological lever and there is a threshold for losses, beyond which the pain in the market can spill over and hurt consumer spending. That's the thinking that underpins the concept of the "wealth effect," or the idea that rising and falling asset values have a material...