Fox cable hosts are doing the job of the chair of the White House Council of Economic Advisers, Jared Bernstein, by admitting that the economy under President Biden is strong. Bernstein joins MSNBC’s Ali Velshi to discuss the latest “expectation-busting” jobs report.
So much emphasis is placed on the stock market and yet the stock market is boosted to all-time highs thanks to a handful of tech companies. In fact, these handful of tech companies make up about 25% of the entire S&P 500 (not even counting the many other tech companies on the S&P 500 that aren’t part of this handful). With how much the stock market is talked about as evidence that the economy is doing great, tech plays an oversized role. So if tech companies are being temporarily boosted by layoffs, what do you think comes after? The AI hype cycle will hit a slump and tech stocks will eat shit, as will the broad stock market because tech makes up so much of it. Then suddenly “the economy” ain’t doing so great.
A lot of great speculation that has absolutely nothing to do with how the economy is doing right now, which is what I thought we were talking about.
Also, and I cannot emphasize this enough: the stock market is correlated with economic health but does not measure it directly. In the first half of 2023 the stock market was erratic due to rising interest rates while the real economy–measured by unemployment rates, salaries, etc–was quite healthy. Conversely, the post-2008 recovery was anemic at best for the non-rich while the stock market rallied to all time highs. There’s a reason I’ve never once mentioned the stock market while making the case that the economy is healthy.
Put another way: your predicted future slump in tech stocks does not therefore mean the economy more broadly will suffer.
And that’s assuming your prediction plays out, and that remains to be seen. After all, I’ll bet you were predicting that Facebook is on the decline, and yet they announced a truly astonishing quarter.
And again, none of this is relevant to the state of the economy right now.