Does a strong market mean a recovering economy?

MSN Money's Anthony Mirhaydari explains how new records on Wall Street may not add up to an improved financial landscape.

By MSN Money Partner Apr 1, 2013 1:00PM
The stock market has been pushing the envelope lately and reaching new highs. The Standard & Poor's 500 Index ($INX) finally joined on Thursday with the Dow Jones Industrial Average ($INDU) and several other indexes that have been breaking records set in 2007. But do those new records mean the economy is strengthening as well?

In the video below, MSN Money's Anthony Mirhaydari explains why, despite all the recent headlines about the stronger market, the overall economy may not be following suit.
On Oct. 9, 2007, the S&P 500 closed at 1,565.15. And it didn't brake that record until last Thursday -- when it finally closed about two points higher at its new, all-time high.

Unemployment line up BananaStock SuperStockU.S. stocks fell apart in 2008 and 2009, as the U.S. economy has entered the Great Recession. Recovery has been slow going, and often amid concerns of double-dip recession. And financial woes haven't been limited to North America. Across the pond, Europe remains a mess and the U.K. is in its triple-dip recession.

So is the strengthening stock market an indication of a finally recovering economy? Not so fast, says Mirhaydari. Yes, the headline numbers sound great, but digging just a little bit underneath the surface reveals a much different picture.

Especially disturbing, Mirhaydari notes, is the situation in the U.S. labor market, where there is a still a job recession and much more is yet to be done.

The discussion about the strengthening market and the economy continues over at MSN Money's Facebook community.

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47Comments
Apr 1, 2013 2:32PM
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Companies are getting very good at cost-cutting. Many are posting rising profits on falling sales. Productivity improvements negate any reason to hire more help. The economy is not getting better if you work for a living.
Apr 1, 2013 1:56PM
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Ordinarily, yes. These are not ordinary times. Obo and the fed are creating money out of thin air and that's the only reason the market is up so high.

Apr 1, 2013 2:51PM
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The market itself is just an illusion now, so, how can it possibly be an indicator of our economy?

 

What I’d like to know is how I’m supposed to run my magic show in Vegas when all the scoundrels on Wall Street have cornered the market in blue smoke and mirrors.

Apr 1, 2013 2:54PM
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Are you kidding me? The stock market is the only economy America has left. Take away Ben Bernanke's printing press and we would still be in a Depression, just a Depression where the DOW is 3,500. You guys and your propaganda are just too funny.
Apr 1, 2013 3:56PM
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Wall street and the current economy is just one big April fool's joke!

Apr 1, 2013 3:42PM
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What is really sad is by the end of the decade, the U.S. should/will be self-sufficient in the energy market and we will be exporting oil to other countries which in turn means that billion or even trillions of dollars will be flowing into this country.

Does that mean we will be fiscally responsible with all that money?  No, I don't think so as we will continue to run up hugh deficits and Government will spend more of our money but the biggest crook of all is Big Business/Wall Street/Banks will demand bigger profits for the shareholders and will still continue to downsize the little people.

In the 1950's, we had 200 million Americans with 70 million of them working.  Today, we have 320 million Americans with with 165 million working.  How many more jobs can we create?  Gone are the days where you stay at a company your whole career and get benefits.  Now we have to pay for our own benefits.

We have to take back America from the greedy rich and big business but it will take all of us to do so.  Buy a house to live in, and don't treat it as an investment.  Stop buying new cars every other year.  Start putting away money for the future.  Stop trying to keep up with the Jones and take care of you and your family.  You never deserve anything in life but you have to earn it.

Apr 1, 2013 2:53PM
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No, it means people moving their savings to a different store of value, one that adjusts daily for Helicopter Ben's printing of money.  With a 68% increase in the money supply since Obama took office the market has adjusted nicely to all the printing....


Apr 1, 2013 3:36PM
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The market (for lack of a better term) is hopelessly dysfunctional and uncoupled from reality, unless you are one of the TBTF banks with unlimited Benny Bucks to throw away and no consequences or accountability to be concerned with.
Apr 1, 2013 3:44PM
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hmm wonder what happens when the money printing presses stop and the REALITY of it all kicks in, interesting also is the fact that the housing market is not improving at all, my friends is real-estate here in Brooklyn, NY and he's been bitchin' bout the horror scene the housing markets' been since the MESSiah's has been disgracing the white house, hmmm, how can this be?? everything's improving! every problem, solved, thanx to the socialist slime of the illegal obama regime, yet nobody's buying even with all time low mortgage rates............interesting. and the answer is; smoke and mirrors, more smoke and more mirrors, hard to pay the low mortgage rate with a temp job isn't it? hard to keep that car loan up with a temp job, well at least osama's cronies are livin' it up aren't they....hmmm the very same 1% the lib's have been bitchin' bout for 5 yrs now, how interesting is that! ha! hey dirtbag libs, why are rich democraps givin' a pass but the rich Republicans aren't? both of them live in a luxury you'll never have, EVER! and yet you love to lick a Marxist azz over and over, that's interesting as well!
Apr 1, 2013 3:19PM
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"These small manufacturing data analysis means small market pullbacks that should be short lived."

 

says Financial Advisor Rank Amature of Brokerage house Dewey, Cheetum and Howe Capital LLC.

Apr 1, 2013 4:58PM
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may not add up?  Heck everyone knows we are in real trouble.
Apr 1, 2013 4:47PM
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What we need is an inflation-adjusted measure of the stock market taking into the account the three fold increase in the money supply provided by the  fed and spineless/brainless politicians who allowed it.

 

If you do this the market isn;t the market closer to  5,000? 

Apr 1, 2013 4:40PM
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Is anyone else sick of commentators referring to records, and asking endless talking heads what they thing about future Market trends.  This is lazy journalism.  I would like to see thought out analysis.
Apr 1, 2013 6:15PM
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The Markets seem to be where maybe they should be...?

Many Economic "trailing indicators are coming along.."

 

But there are also other indicators that show the Markets and many stocks are overbought..

Apr 1, 2013 2:28PM
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LOL this guy is a desperate clown grasping at straws
Apr 1, 2013 7:31PM
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IQ...........I've walked on Wall Street....I know where it is at.

 

Where dreams and fortunes are made and/or taken away..

 

Not like Wall St., in a town near us, where there are about 20 Trailers or Mobile homes.

Apr 1, 2013 6:12PM
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IQ168....Maybe you meant to say..."The ' Economy ' and Wall St. are not same thing"??

 

Instead of: " the stock market has absolutely nothing to do with Wall St."

 

For some strange reason, I think they are pretty much the same thing...Just sayin'

okay...?

Apr 1, 2013 5:01PM
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"Especially disturbing, Mirhaydari notes, is the situation in the U.S. labor market, where there is a still a job recession and much more is yet to be done."

 

Eh.  This is kind of misleading.  Job market has been slowly getting better since 2009.  A "recession" is characterized by negative growth, jobs don't fit that discription.  So yes, unemployment is still too high.  But big picture wise, it's gradually, slowly, getting better.  (as part of the business cycle, not due to anything our idiot potus did). This means that earnings, on average, should gradually, slowly get better as well.   The real question is, are all the earnings gains already factored in? or not?

 

Perhaps when the day finally comes that unemployment is low, Anthony will be telling we should buy stocks.  Only problem is, unemployment historically trends in cycles, so really that will be when it's time to get out.  (especially, considering the interest rate tsunami headed our way once the feds decide thier about face.)

Apr 1, 2013 9:47PM
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I've said for at least 3-4 years that a strong market doesn't always relate to a strong economy.....

The Economy is the trailing indicator....And this recovery has been a snail sitting at the crossroads.

Apr 1, 2013 6:20PM
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Today the DOW was flat..

The S&P back down under it's record close..

 

The Nasdq...down a little futher..

But the RUT was down almost 1.4%...

And several Stocks/Companies were down 1.5 -2+%...hmmmm.

 

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