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How do you feel about the stock market vs. the economy?

I ask because I can't seem to understand how the stock market is going so great while the economy is in such a horrible state. The stocks are pushing 14,000 and the value of the dollar is getting less and less. The real estate market is hitting the dust. People are spending much more than they get. Foreclosures are running rampant. Unemployment is high. Last time this kind of thing happen, we ended up in the Great Depression. The stocks were great. The Roaring 20s were full of partying and pizazz. The 30s? People were living in shacks because the stock market crashed. Now, I may need to brush up on my history, but isn't this pretty much how things went? I don't think we're far from the same ordeal. Even if we don't hit a depression, things aren't getting better. I know there's an economic cycle, but it seems that we're not rebounding into the positive side. I can't see how things are going to get better. For those of you business scholars out there, maybe you can help me. I feel, though, that if we do hit another depression, it will be much, much worse than that of the 30s. Your thoughts?

Public Comments

1. The stock market is doing well because the economy is also doing well. In spite of those complaining about the economy, the average American is better off than they have ever been. They are also far better off than most people in other countries throughout the world. One shouldn't always believe what one reads in newspapers that are biased.
2. I think you have been listening to "talking points" from politicians and don't have a clear understanding of whats actually going on. The current unemployment rate nation wide is 4.5%, lower then when Bill Clinton was in office. Home values have skyrocketed since 9/11 due mostly to low interest rates(read cheap money), so people who own homes have made money in appreciation on them. This money people have spent, in return has helped businesses to grow. When they take money out of their house they now carry more debt, but because of the lower interest rates, people can still afford their payments, so they spend the money. The real estate market is moderating, not "hitting the dust". It has only come down drastically in areas that had overblown prices to begin with. Not the whole country. Foreclosures are up, but not rampant. The fed reserve chairman came out last week and stated that the subprime mortgage problems don't look like they are spilling into the rest of the economy. The Dow is at a record, more so because the 30 companys reflected by it's price are international companies who are making more money outside the US. The global economy is booming. The reality of the matter is that while certain sectors of the economy or regions of the country might be feeling pinched, it's not everybody everywhere. Only you can make the proper choices in your life to change your position, if you are not satisfied . Buckle down, go back to school, change jobs, move, or get pinched.
3. WOW,, I happen to agree with you 100%. I had to check and make sure it wasn't me that wrote the question! Realize that it is the DOW that is near 14,000. The DOW is a tracking index of 30 (THIRTY) stocks. It is "supposed" to indicate the strength of the market. the S&P 500 is only 500 stocks.... There are plenty of stocks that have gone down or nowhere. The falling dollar isn't the worst thing for people who only buy things in dollars. Of course it will be expensive "in dollars" to travel outside the country or buy foreign made goods, but it isn't good. Real estate is only "hiting the dust" in certain markets, (the ones that were in a bubble) Many markets are just flat, a few are actually increasing. MOST Foreclosures are concentrated in 6-8 areas of the country. National unemployment isn't really that high, although certain area are bad. That being said, You are RIGHT ON about the pre-1929 depression era. When I tell people this they look at me like I am from the moon. Realize that this economic cycle could continue for 25-50 years or more until the "big correction" Your logic is EXCELLENT, it is not flawed. It takes "suckers" to create a bubble, in any market. Some people make fortunes at the expense of the suckers. People have already forgotten the dot com NASDAQ bust of 1999-2000. Million dollar portfolios became $100K or less. There are MILLIONS of people "investing" in the stock market through their IRA's and 401K's without understanding a thing about the stock market, just like they did in the 90's and the suckers that bought houses in the hot markets after 2004. Some people got lucky and got out with nice profits. Some people are or will be financially ruined because of their homes, but many will not. If the stock market hiccups and people get scared, the run on selling could be beyond expectations, but as long as the "sheep" just keeping having a portion of their pay withheld and "invested" in the market blindly, you and I will be wrong.... The housing crisis in certain markets will continue another couple years (or longer) and may not recover, if ever. Too many people in any market without really understanding the risks creates a crazy bubble. it's happened before and WILL happen again.
4. There have been some very good points made so far. If you live in an area of the country where things are bleak such as where I live , you can not even get a job that will support your family and people are moving away in groves to better areas of the country. So if you ask me how do I feel about things , I would give you a poor forecast on the economy. Why ? Because things are not so good for me. Now if you turn your TV on and watch shows on the Home and Garden Network. You will find people who money is no problem and they are paying 750 thousand for a home like in Seattle or San Fransico, that in my city would only cost 150 thousand. So to them money is no object. And I shake my head and say how can this be ? I believe in real life the average person sinks their retirement in the stock market hoping to make a profit by doing so , and some do. My real feeling is this, I think those behind the scene who manipulate other peoples money are getting richer and know when to sell to suck the life blood out of the working class money. So they are weathier , and we have less. They do it over and over by gaining the confidence of the people . If you are not in the wealthy class of society , you never hear about any profit movement until its too late. The profit has been made by the time you hear about it, and all they do is feed more on your late arrival. Just another opinion