Thursday, March 10, 2016

The Link Between the Economy and the Market

There's an obvious connection between the stock market and the larger economy - when the economy is humming, the markets tend to do well also. A recent report from Wells Fargo has quantified that relationship: Apparently, whether the economy is speeding up or slowing down can be a key signal as to where the market is headed.

According to Wells Fargo, since the recession, economic growth has accelerated in 12 quarters, and the stock market rose in 11 of those quarters. In the 15 quarters where growth was slower than in the previous one, the market was flat or fell.

GDP growth slowed between the third and fourth quarters last year, and this quarter has indeed been a weak one for the market. We won't have a reading on first quarter GDP for 2016 until the end of April.

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