The Impact of the Stock Market on the Economy

Paper Summary:

This paper looks at the effect the stock market has on the U.S. economy. It looks at the effects of a declining stock market and a rising stock market. Also discussed is to what extent the economy effects the stock market and how much the two are intertwined. The paper also includes opinions and analysis from different experts in economics, which help explain the relationship between the stock market and the economy.

From the Paper:

"Recent declines in the stock market have had a detrimental impact the economy both in the United States and abroad. The stock market and the economy are deeply intertwined. As such, stock market declines have a wide-ranging effect on many sectors of the economy. Importantly, the health of the stock market is seen as an indicator of the general economic health. Thus, any decline in the stock market is often seen as a negative prediction for the economy. Drops in the stock market often translate into decreased net worth for both households and businesses, and thereby decrease consumer spending and confidence, resulting damage to the economy."

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