Prices on US stock exchanges are falling rapidly. Does this mean the US economy is collapsing? A number of events are still fresh in our minds, most notably October 1929, when the value of US stocks fell by 40% in one month. This was followed by a wave of bankruptcies and a sharp rise in unemployment. In effect, an economic collapse.
Concerns about whether the US economy is collapsing are therefore logical. After all, stock prices have already fallen by 20%, and that’s probably not all.
Only this time, stocks are falling and US companies are creating a record number of jobs. This does not look like a repeat of the crash. There is something that the current system of indicators cannot meaningfully describe.
After all, we have had the same problem with the Russian economy in recent years. According to some indicators it is collapsing, according to others it is flourishing.
We will see this more and more often. We are entering an era when it will be meaningless to express the performance of an economy in purely financial terms. And when it will be doubly meaningless if those indicators depend on the views of investors.
