The highs of the market

Posted on October 19, 2011 by

In a recent article, the Economist noted that Americans’ happiness is a highly-volatile thing that correlates closer to stock market valuations than to unemployment rates. With millions of Americans plugged into mainstream news channels, which cheer the rise in prices and lament the falls, everyone seems to have lost sight of the fact that stock prices don’t actually matter very much to their lives.

Levels of worry, stress and pain stood at slightly higher levels in December 2010 than they did before the crisis… But these measures did not spike most dramatically when there was bad news about the labour market. Instead, rising levels of worry and stress were closely tied to stockmarket declines, and these emotions returned to more normal levels when the markets recovered. It appears that changes in the unemployment rate do a poor job of explaining when and how people’s assessment of their own lives changes.

This has become a problem endemic to the entire system, with the public and the politicians staking their very lives on the relentless growth in share prices. In a bizarre twist, even those companies who announce massive layoffs are rewarded with “buy” recommendations. Nothing heralds the end of an economic system like people celebrating their own penury.