Written by Whether or not you currently invest in the stock market, do you keep up with basic stock market news at least a couple of time s a week? We all know that what’s going on in the stock market is a reflection of many economic factors and trends. One thing many of us fail to realize is that we may be affecting the stock market based on how we react to fluctuations.
It’s mostly about perception. While some economists say most consumers are barely affected by fluctuations in the stock market, this may be wishful thinking. Nowadays everyone seems to hear about and understand what’s going on with the stock market more and more. When stocks drop, consumers with investments in the market and mutual funds pay attention and many perceive themselves as less financially secure. In other words, they are less confident. Less confident consumers may spend lest, feeding into economic woes.
Does it matter how much or how little wealth consumers actually lose during downturns? Even consumers with no investments or very minimal investments are concerned when the market falls. It probably matters more how consumers perceive the implications of stock market fluctuations than how much or how little their financial situations actually change.
