Wall Street Bears Watching as World Trade Withers

The conventional wisdom in financial circles says the stock market isn’t the economy. But sometimes it is. And this is one of those times.

Confusingly counterintuitive, while the Dow Jones Industrial Average, along with the other indices here and around the world are only some of several barometers economists rely on to measure the strength or weakness of the economy, there are times when it is true that when Wall Street sneezes, Main Street gets a cold. And this next one could be a doozy.

The social science of economics can be convoluted and confusing with complicated statistical formulas and theoretical models. Since few people speak the language of the dismal science, the daily report from Wall Street serves as a familiar touchstone for what the economy is doing. Everybody has heard of the Dow Jones Industrial Average and the news media trumpets the closing numbers, especially when the index skyrockets or crashes.

Put simply, for many, the stock market represents the economy in a short sound bite, leaving people to believe that what is good for Wall Street is good for the country. When the markets are flying high, breaking records and fattening portfolios, that means good times are ahead. And when the markets tumble, erasing billions of dollars of “wealth,” that surely must be a bad sign. While not completely accurate, it is the standard interpretation of what the markets mean for the economy.

As such, what is happening on Wall Street and in the equities markets in general can set the tone for how we perceive the economy. It was not so long ago that conversations about the state of financial affairs focused on the idea of the “vibe economy,” an idea that what people thought about the state of the economy became more important than economic reality.

With fundamental changes in U.S. trade policy underway and the increase in volatility, what’s happening on Wall Street has become the way people can process the confusion and uncertainty roiling markets. And that makes the stock market a key touchstone in trying to make sense of it all.

It may not be based on the latest statistical analysis or conform to advance economic modeling, but how people feel about their personal financial situation – and if things are about to get a lot worse – is the only economic reality that really matters.

Trade agreements and reciprocal tariffs are not the stuff of conversation around the dinner table and the nuances of advanced economics is beyond the understanding – and interest – of most of us. But we know what the stock market is and we can see the arrows pointing down in the slick graphics on the evening news and blasting across social media. For now, at least, all eyes will be on Wall Street eager to see if the bears are on the prowl.