The stock market boomed. The economy did not. Economists noticed these two things happened at different times and decided this was worth explaining to people who buy stocks.
Here's what they discovered: numbers can go in different directions. Revolutionary stuff. The S&P 500 ripped higher because everyone convinced themselves that AI would solve every problem humanity has ever faced, including the problem of having to think about what stocks are actually worth. The real economy—where people work jobs and buy things and occasionally wonder why their rent costs more than a kidney—moved at the speed of a DMV on a Friday afternoon.
This created what financial journalists call a disconnect. Normal people call it Tuesday. The stock market hasn't cared about the economy since approximately 1987. Sometimes it goes up when the economy tanks. Sometimes it crashes when everything's fine. The correlation between the two is about as strong as the correlation between your horoscope and your portfolio returns.
But retail traders keep checking CNBC like it's a treasure map. They read articles explaining why stocks moved after stocks already moved. They nod along. They feel informed. Then they buy calls on a company that makes chatbots because Jim from accounting said his nephew's friend works in tech and the future is now.
The AI boom minted paper fortunes for people who own shares in companies that lose billions of dollars per year. The economy created jobs that pay wages that buy less than they did two years ago. These facts coexist. They always have. Pretending this is a mystery worth solving is like pretending you don't know why the McFlurry machine is broken.
Economists will keep explaining the disconnect. Financial media will keep writing about the disconnect. Retail traders will keep losing money in both good economies and bad ones, because the disconnect they should worry about is the one between their brain and the buy button.
Photo by Anne Nygård on Unsplash
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