And while the majority of those who read my post did agree with my statement others did not...as is their right...as they either have no idea that the “stock market” is both a key indicator of how our American economy is doing and thus affects the pocketbooks of each and every one of us to some degree, or they simply don't care as they still believe that the “stock market” only affects the rich and/or those who invest.
So maybe it's time for a lesson in “Economics 101” on how the “stock market” plays into it courtesy of five bonafide facts...facts in simplified layman's terms of course.
Fact One: Over the past 20 to 30 years there has been a tremendous increase in the number of people...including young people...putting their monies into the “stock market” as opposed to a regular bank type savings account and/or a CD (Certificates of Deposit) as was the case for most folks in the past. Why so...because with today's interest rates remaining relatively low in regards to buying a home...they currently, as I write this, hover in the 6% range compared to the 1980s when said interest rates reached 18.63% on average...folks tend to forget that in turn the same interest rates will remain low for CD's and for savings accounts as well. And the consequences of this fact means that very little money...very little profit...is being made off those entities, thus turning them into basically negative yielding investments.
Fact Two: The “stock market” today has now become a modern day savings account of sorts, and it's not just for the rich any more, but for middle and upper middle class families as well...families who no longer believe that the traditional type of savings account will help them to increase their wealth now or in the future. And this makes perfect sense because when one invests in the “stock market” one's money immediately starts working for you which is simply not possible with bank driven low interest rates.
But here one needs to understand that while one can make large sums of money courtesy of wise investments, and sometimes in a relatively short period of time...one can also lose large sums of money also in a short period of time. How so? Simply, more times than not, it's courtesy of a downturn in the economy coupled with rising inflation numbers, as well as in times of war itself. And while wars...like the Iran War we now find ourselves in...can and usually does lead to short-term stock market “sell-offs,” hence falling numbers, those drops in number are usually not long lasting, as historical data itself shows that geopolitical events, like wars, usually do not have prolong effects on the trending course of the “stock market” itself.
Fact Four: However, when times of war are combined with what is economic woes for the majority of people...as in when both gas and grocery prices rise even a small percentage...a “stock market” drop in numbers can be disconcerting for far too many folks, especially those new to the market. And why so...because many new investors do not understand that it's the economy itself that sets the stage for both corporate performance and investor expectations, which in turn then drives “stock market” trends, and that it's how the “stock market” reacts to said trends that directly influences consumer spending, all important business investment, and overall economic sentiment, which can include monthly “jobs numbers.” Simply, the “stock market” is indeed a reflection of our county's economy and visa-versa.
Simply, because presidents are responsible for implementing and enforcing the law, they surely do have some control over business and market regulations which in turn directly affects the economy itself, and thus filters down to the “stock market.” In President Trump's case think of his recent, what I consider to be, high stakes tariff fiasco...the one where he raised tariffs so high on certain countries doing business with the U.S. that said countries literally could not afford to continue doing business here unless said tariff raise was negated or at least neutralized. And how did the countries affected accomplish this...simply by passing on to the American consumer a price increase in the products being sold to them.
Remember, when the “stock market” drops too fast serious economic consequences can see the government possibly having to raise taxes, which in and of itself is an obstacle to economic growth. And this helps to tie the “stock market” and the economy together, as does war itself for uncertainty of a war's outcome, coupled with the logistics of what would likely be rising inflation, tends to see panic driven “sell-offs,” directly affecting overall economic conditions.
As a successful businessman President Trump knows all this...I just hope his wish for a “deal”...a “deal” he's trying to make with terrorists...does not backfire in his and our economic faces. Case closed.
Copyright @ 2026 Diane Sori / The Patriot Factor / All Rights Reserved.
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