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As US stock market hits new highs, 2 of 3 Americans are cutting back on spending, survey shows (apnews.com)
submitted 4 months ago by to c/aboringdystopia@lemmy.world
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WASHINGTON (AP) — U.S. consumer confidence declined slightly this month as gas prices stayed high and inflation remained elevated, a sharp contrast to soaring stock prices hover near record levels.

The Conference Board’s consumer confidence index slipped 0.7 points to 93.1 in May, the first decline after three months of gains. The measure hasn’t fallen as much this year as other gauges of consumer attitudes, but it has been stuck at a low level since the pandemic. Before COVID-19, it regularly reached 130.

A separate gauge of consumer sentiment released last week by the University of Michigan fell to a record low this month. Soaring gas and food costs have worsened inflation that is outpacing the average growth in paychecks, reducing most Americans’ purchasing power. Americans have soured on President Trump’s economic policies, polls show, potentially creating problems for Republicans heading into the midterm elections.

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[–] 69 points 4 months ago (15 children)

How is the stock market increasing if people aren't buying the things that those companies produce? I know the answer is because the stock market is based entirely on feelings and doesn't have any basis in reality. But I still want to ask the question.

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  • [–] 31 points 4 months ago

    I know the answer is because the stock market is based entirely on feelings and doesn't have any basis in reality.

    I mean, that's phrased really about as well as anyone could phrase it. You could also say that there are two Americas: the 1% and everyone else. The stock market is a measure of how the 1% are doing. When Bondi said "the Dow is over 50000!" in that senate hearing, she was basically just saying, "the rich people think this administration is great, so you should too."

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  • [–] 21 points 4 months ago (2 children)

    2 factors:

    Every salary person has 15% of their income go to the stock market for their 401k.

    Most things are staples that people have to buy. Companies increase their prices and consumers don't have a choice. The increased price means increased earnings.

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  • [–] 23 points 4 months ago*

    Currently the rest of the stock market is essentially held up by 7 companies.

    • Tier 1 — Magnificent Seven / Mega-Cap: Up 75–100%+ over five years. Cash-rich near-monopolies trading on AI futures. Effectively function as quasi-sovereign entities. Collectively hold over $420 billion in cash.
    • Tier 2 — Rest of S&P 500: Up 50–60%. Piggybacking on the giants through index weighting. Solid balance sheets but increasingly dependent on AI-adjacent demand.
    • Tier 3 — Russell 2000: Up roughly 17%. The “one percent of the losers.” Struggling but kept alive by access to public capital markets. 40–44% unprofitable. Facing a $709 billion refinancing wall in 2026–2027.
    • Tier 4 — Private Middle Market: Flat to declining. Consolidating from roughly 200,000 to 125,000 firms over two decades (RSM). Margin-squeezed by tariffs and input costs. RSM MMBI showing fragility.
    • Tier 5 — Main Street / Small Private Business: Fighting to exist. No access to Wall Street capital. Absorbing inflation that large firms pass through to customers. NFIB Optimism Index showing persistent fragility.

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  • [–] 13 points 4 months ago

    The stock market isn't really dependant on companies actually producing stuff. The expectation of them producing stuff is enough. Which is why this whole AI-circlejerk exists for example.

    It is all insider trading and companines funding each other with the same non-existant money.

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  • [–] 3 points 4 months ago* (3 children)

    All the money that's accumulating in the hands of the ultra rich has to go somewhere, and that somewhere is investment assets and investment assets are chosen based on going up in price and said going up in price needs not be for any reason other than that money is going into those assets in the expectation that the prices will go up (i.e. it's just a feedback loop of price increases attracting more buyers which in turn makes prices go up).

    It's one big Ponzi Scheme and it will keep on going until there is no more money entering the scheme.

    As it so happens we're living a long period of the wealth that was accumulated across society for decades being sucked out from the hands of the many into the hands of the few, and said few then keep putting more money into investment assets (what would be the point of buying yet another yacht) which is what keeps the whole price goes up because people buy -> people buy because price goes up loop going in so many asset categories, from housing and stocks to ultra speculative stuff like crypto.

    This shit will only stop when it crashes and the longer it keeps going the harder it will crash.

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  • [–] 2 points 4 months ago (2 children)

    Tbf a lot of it is ordinary people with their 401ks or ETF purchases. Like a very big percentage. That creates the baseline demand, which means the line is always going up when things are good.

    Then the ultra rich and the gamblers make bets on which companies beat that constantly rising line.

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  • [–] 2 points 4 months ago (1 child)

    Yeah, I've seen that in the UK (were I worked in Finance) and The Netherlands were both governments changed the legislation to make any Retirement Savings above a certain point have to go via Retirement Funds (which mostly ended up in the stockmarket) in order for that money not to be taxed - all that money was propping up the stock market, paying for some serious shenanigans in the Funds part of the Industry (like Fund Managers sending tons of money to Investment Banks in the form of things like trading fees and later moving to highly paid positions in said Investment Banks) and pretty much being the part of the market regularly fleeced by big professional players with advantages such as insider info, which was mainly Investment Banking Prop Trading desks (anybody who thinks the Chinese Walls between Client Desks and Prop Desks actually works have never worked in that side of the Industry, actually get paid to hold and spread such beliefs and/or still believe in Santa Claus and the Tooth Fairy).

    Some people who do check how much money is their Retirement Fund worth complain that their Retirement Fund levels have barelly gone up faster than the money they put in but most people are only going to notice just how seriously screwed they're being by that whole system in a couple of decades when they try to retire, which is why politicians and their ("thankful", very, very materially "thankful") mates in Finance are getting away with it.

    In summary, Retirement Funds (and, I assume the US equivalent: 401k) not only prop-up stock markets because they're a huge slice of the saved wealth from regular people, they are also the prime sheep in the markets that get regularly fleeced by the Finance Industry and people are only going to notice what's happenned decades from now, by which time everybody involved in the scam will have walked away very rich.

    This is probably one of the main pathways via which the wealthy (and quite a lot of parasites) plunder the wealth of the Middle Class at levels which are far beyond anything since the late XIX and early XX centuries.

    I didn't mention any of this in my previous post because it would just add and extra dimension and hence confusion to the point I was making, but I definitelly have a very strong insight (or so I like to think) on the subject.

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  • [–] 2 points 4 months ago

    Well, index funds are also the only way for the average person's portfolio to appreciate faster than inflation. Remember that even most professional traders underperform compared to S&P500 in the long term.

    Now if the funds you experienced were actively trading rather than just buying Index ETFs, that's definitely a scam.

    Before I turned mine here in Estonia from a composite index fund into a trading account, it held US, european and world stock ETFs. Now I'm holding european, Asian emerging markets, China ETFs and some individual Estonian stocks that reliably pay dividends. I ain't keeping my shit in the US with Trump in charge.

    NASDAQ 100 just got changed to completely fleece everyone who holds it next month though. Interest Free Loan With No Repayment Obligation To Elon Musk, inc is going straight into the index when it IPOs lmao. As will ClosedAI and Anthropic when they IPO.

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  • [–] 1 point 4 months ago

    Stock price is dependent on the average trade price, so technically you could just drive up a stock if you had limitless funds.

    But the fun stuff is market cap (the "value") of a company only takes the current price into account, because how else could it work?

    So recent trades drive up the value of a stock that most people bought when it was cheaper, doesn't mean a billion or trillion or whatever dollars went into it recently. Only means there are more buyers than sellers and the price has gone up.

    It also means that you can't actually sell the entire company worth of stock and get the value listed as its market cap. There wouldn't be demand for it and it would plummet hard.

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  • [–] 0 points 4 months ago*

    For tech, it goes up because expectations on higher profits. Datacenters and the dystopia is driving right now. Memory sticks are through the roof because datacenters buys it all. Same with drives and gpus.

    It takes years to build the dystopia so lots of profits on that. And then profits on watching people in real time and selling their data.

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