Somehow the alt right whining about the economy just does not hold water.
Amazing market gains today.
CNBC US Home
- +255.43+1.33%
S&P 5002233.42
+21.19+0.96%
NASDAQ
Silly Jake- thinking a high stock market means a good or healthy economy. Ask low wage earnings how great this economy is. Here is a bit of education you should appreciate. Those invested in the market and real estate have done well, thank you very much. Unfortunately the anemic growth has further increased the wealth/income gap. That's not a great economy sport.
Relationship between stock market and economy | Economics Help
Profits as a share of GDP. Since the 2008 credit crunch, we have seen company profit become a bigger share of national income. Despite low economic growth, firms have been able to increase profitability. In short, real wage growth has been muted, but many companies have seen a rise in profits and
cash reserves. This is due to factors, such as the monopoly power of large IT firms, such as Apple, Google and Microsoft. Therefore, despite relatively weak economic growth, publically listed companies, are still attractive to shareholders because they have retained their profitability, and even increased it faster than GDP growth.
Ultra low interest rates. In 2016, we have seen a rise in
government bonds with negative yields. This means investors are buying bonds – even though, they lose money because of negative interest rates. This is because in the current climate, investors are pessimistic about the fortunes of the economy. With great uncertainty in the economy, investors are happy to buy bonds for the security they offer – even though they have very poor returns. Because of ultra-low interest rates, shares become relatively more attractive. Investors are willing to buy shares, despite threat of recession, because they at least have a good yield compared to bonds.
Ironically, the stock market can do relatively well because there is a poor choice of investment opportunities.
