U.S. stocks fell sharply on Friday, leaving the benchmark S&P 500 with its worst weekly performance since May 2012, as investors pulled back from the markets in response to oil’s free-fall and more weak data out of China. SOURCE: Oil slump leads Wall Street to worst week in 2-1/2 years – Yahoo Finance.
I am by no means an economist who espouses to understand all this stock market stuff but it seems to me that whatever is good for the common guy economists think is bad for the stock market. Declining oil prices will put billions of bucks back into the average guys wallet and that means she can spend it on other things for the family. Things such as paying off the mortgage, going out to eat a little more frequently, buying some much-needed new clothes or even a new water heater. How can that be bad for our economy?
I guess the stock market logic is that with lower oil company profits comes less dividends into the rich guys pockets and of course we all know that the rich guys are the job creators don’t we 😉 therefore people will have to be laid off because of lower oil prices… Now I’m not saying this form of logic makes any sense and I’m sure it comes from the same folks who time after time say raising the minimum wage will result in millions of jobs being lost and of course we all know that never happens.
Maybe a declining stock market is a good thing. I have been thinking that it is rising too rapidly lately for its own good. Maybe falling stock prices at least in this incidence is a way to take it out of the rich guy’s pocket and put it in the working guy’s pocket. Lord knows he need a break as he has not had a raise in decades now. If the companies won’t give him his share of the profits maybe he can get it from falling commodity costs.
The second reason for these recent stock drops was cited to be the slowing increase in the Chinese economy. They are now only projected to grow twice as fast as we are. Again how is that a bad thing? It means that a few more of us here in the U.S. might see our jobs stay here a little longer instead of being farmed out to China. I don’t know, I am just an average old guy I guess but these two things seem to be good things to me. But then again what do I know….
Now before you start sending me comments trying to set me straight I want to let you know that much of this post is tongue-in-cheek. Much but not all…. The average guy needs a break wherever he can get it 🙂