America is in the middle of a pandemic, calls for social and racial justice are rolling through the country and yet during this time of substantial uncertainty, the DOW and NASDAQ just posted their best quarters in two decades.
“The stock market is not trying to reflect the recent past. It’s designed to predict the future.” — Derek Thompson, The Atlantic
How should Americans make sense a of prosperous stock market when most of the country is bracing for a recession?
Listen: How is the stock market doing so well?
Derek Thompson is a staff writer at The Atlantic where he writes about economics, technology and the media.
He is also the author of “Hit Makers” and the host of the podcast “Crazy/Genius.” He says it’s important to understand the stock market as forward looking, accounting for some of the disparities being witnessed. “The stock market is not trying to reflect the recent past. It’s designed to predict the future,” says Thompson. He adds that the current market is reflecting the growing use of technology as life increasingly transitions to online interactions. “The stock market is being driven by a handful of tech companies. And if you think about it, that kind of makes sense,” says Thompson.
He says the inclination for many to dispute the stock market’s relationship to the economy, especially in times like this when it doesn’t seem to reflect everyday Americans’ reality, is inherently flawed. “Saying the stock market is not the economy is like saying my neck is not my body. It’s a part of my body,” says Thompson.