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Analysis: The simple thing Trump doesn't get about the stock market

September 16, 2020. Summarized by summa-bot.

Mandatory Credit: Photo by Erik Pendzich/Shutterstock (10771571f) A man wears a face mask as he walk past the New York Stock Exchange building on Wall Street New York Stock Exchange, New York, USA - 09 Sep 2020

America's booming stock market is a flawed yardstick for measuring Main Street's recovery from the pandemic.

New York (CNN Business)America's booming stock market is a flawed yardstick for measuring Main Street's recovery from the pandemic.

"Look, we're having a tremendous thing in the stock market, and that's good for everybody, but people that aren't rich own stock and they have 401(k)'s. "

In truth, millions of Americans can't feel the stock market boom.

"Holding up the stock market as the barometer for how the middle class is doing is totally erroneous -- and very misleading," Edward Wolff, an NYU professor who has studied stock ownership and inequality, told CNN Business.

Trump argued the sharp rebound in the stock market doesn't only help "big people. "

But rich Americans have far more skin in the stock market.

As of the first quarter of 2020, the wealthiest 10% of American households owned 87% of all stocks and mutual funds, according to the Federal Reserve.

The middle class, defined as households in the 20% to 80% range of wealth, owned just 6. 6% of stocks outstanding, according to Wolff's research.

"The performance of the stock market is so disassociated with the economic experience of the vast majority of Americans -- particularly the middle class," Wolff said.

"Most Americans don't really have much of a stake in the stock market. "

In any case, the stock market is not -- nor has it ever been -- the economy.

At times, the stock market can feel completely disconnected from the fundamentals of the real economy.

Likewise, consumers -- especially ones that own significant amounts of stock -- can take their cues from the market.

While market meltdowns can cause Americans to hunker down, headlines about record stock prices can do the opposite.

Black households own just 1. 6% of stocks and mutual funds, according to the Fed. Hispanic families owned the same amount.

Americans with no college education own just 5. 4% of stocks and mutual funds, according to the Fed. That's down from nearly 17% in 1989.

All of this means that the boom in the stock market is amplifying the inequality divide that has helped fuel unrest in the United States in recent months.

That's why the next president is unlikely to tie him or herself to the whims of the stock market to the degree that Trump has.

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