The booming stock market shows America is diseased

By Ryan Cooper

One of the more peculiar tics in mainstream media is treating the stock market as a sort of general barometer of economic health. If it’s going up, then things are assumed to be going well — and if it falls a lot, then it’s time to worry. Thus conservatives have been celebrating the astounding stock rally of the Trump era, which has been more than twice as strong as the average since 1928 for presidents at this point in their term.

To be sure, a stock market crash can have serious negative repercussions. But the booming market is also evidence of a deeply sick economy — one geared to funnel money to the very tippy-top of the wealth distribution, and which is seriously vulnerable to another devastating financial crisis.

The first thing to know about stocks is that a huge fraction of the population owns no stock at all, and only the rich own them in significant quantities. A Gallup poll found that 55 percent of people own any stock — a majority, but most of them own only small amounts. If we break the population into 10 groups (or deciles) based on how much stock they own, as Matt Bruenig does with the Survey of Consumer Finances of 2013, we find that the top decile accounts for 86.8 percent of all stocks. The next decile owns 9.5 percent, the third 2.8 percent, and the rest little or nothing.

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