Very little of the gain, Most of the Pain: The Stock Market and the Real Economy

Something like 80% of all traded securities are owned by the top 10% of households by wealth. So it is galling when we see the stock market moves being used as a proxy for the real economy. And I get it - it's the only number we have in real time, and one theory of equity pricing says the market is omnipotent and it is just pricing in the future, so a drop is scary. (Though there is question about causation here, in a mutually reinforcing dialogue with many possible futures).

Anyway, the real frustrating thing is that there is an asymmetry with the real economy. Presidents don't usually have a lot of control over the economy. One thing that they can do is make corporations richer through tax giveaways, just like the rushed TCJA did. What we saw was an increase in the level, not really of growth. Some corporations were lauded for giving one time bonuses that accounted for fractions of the paper increase in the value of their company, but we didn't see widespread wage growth. In terms of the share of the pie, labor's share has been on a secular downward trend for a generation now. The huge problem is that drops trigger broad corporate austerity - so you look for costs to cut to maintain profitability in the short term because publicly traded companies only care about the short term.

So while I feel the impulse from the left to have some glee about the market dropping in order to discredit Trump, the real effects will not be felt in the portfolios of the rich, but retirees and the working classes who will get hit in real terms.