Why Have Stocks Soared While the Economy Suffers? | Presented by CME Group

U.S. consumers are spending less, but the stock market keeps hitting new record highs. It's. Time to ask, Have equities broken up with the real economy. ( big band swing, music, ), ( cash register, pings ) Credit card transaction data suggested American consumers spent about 4 % less in September 2020 than they had in the same month the year before.

. At the same time, certain US equity indices hit record highs in August and early September., But when we take a closer look at the equity market and real-time consumer-spending data, the idea that stocks have done well, while the economy continues to suffer, is at best half-true.

. There's, no question that the NASDAQ dominated by big name, tech stocks like Apple Microsoft, Amazon, Alphabet and Facebook have defied the slack in consumer spending., But the NASDAQ has left everything else in the dust too, including more broadly based equity indices.

Like the S & amp, P, 500 and the Russell 2000., These two indices have tracked consumer spending closely, especially the Russell 2000, an index of smaller companies with a relatively low weighting to technology stocks.

. Many of these smaller firms were hard hit during the April and early May lockdowns., And once those lockdowns were lifted, they recovered in line with consumer spending.. So how does an economist look at consumer behavior during the pandemic? Consumers are still spending, but their needs and options have changed.

And that's. Having an impact on the economy., Take groceries for example. People, aren't eating out as often so grocery store. Sales have been running consistently at about 10 % to 12 % above normal..

Other sectors are not doing so. Well. Apparel and general merchandise are down about 7.5 %. Consumer healthcare spending not covered by insurance is down by about 12.5 % And restaurants. They are down 27 %.

Clearly we can see that changes in consumer behavior do not impact all economic sectors. Equally. Here's. The real story, according to an economist., Have equities truly broken up with the real economy.

The answer is that it depends on the equity.. Some equities have particularly among large-cap technology, telecommunications and consumer discretionary names, but most other sectors and most smaller companies remain firmly tethered to the reality on the ground.

u.s. Consumers are spending less, but the stock market keeps hitting new record highs. It's time to ask, have equities broken up with the real economy. [ Music ] credit card transaction data suggested american consumers spent about four percent less in september 2020 than they had in the same month the year before.

At the same time, certain u.s equity indices hit record highs in august and early september, but when we take a closer look at the equity market and real-time consumer spending data, the idea that stocks have done well, while the economy continues to suffer, is at best half True there's, no question that the nasdaq dominated by big name, tech stocks like apple microsoft, amazon, alphabet and facebook have defied the slack in consumer spending, but the nasdaq has left everything else into dust too, including more broadly based equity indices.

Like the s p, 500 and the russell 2000, these two indices have tracked consumer spending closely, especially the russell 2000, an index of smaller companies with a relatively low weighting to technology stocks.

Many of these smaller firms were hard hit during the april and early may lockdowns, and once those lockdowns were lifted, they recovered in line with consumer spending. So how does an economist look at consumer behavior during the pandemic? Consumers are still spending, but their needs and options have changed and that's.

Having an impact on the economy. Take groceries, for example, people aren't eating out as often so grocery store. Sales have been running consistently at about 10 to 12 percent above normal. Other sectors are not doing so well.

Apparel and general merchandise are down about seven and a half percent consumer healthcare spending not covered by insurance is down by about 12 and a half percent and restaurants. They are down 27. Clearly, we can see that changes in consumer behavior do not impact all economic sectors.

Equally, here's, the real story, according to an economist, have equities truly broken up with the real economy. The answer is that it depends on the equity. Some equities have particularly among large cap technology, telecommunications and consumer discretionary names, but most other sectors and most smaller companies remain firmly tethered to the reality underground.


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