Stocks and GDP

[Michael Perelman]

I do not have much to contribute to the debates about 30 year trends.  However
in the shorter period, I think we have to take account of the powerful forces
that had shifted the distribution income and wealth so dramatically.  While some
of this income is used for consumption, with the decline in job security,
pensions, and faith in social security, many affluent people are scrambling to
accumulate wealth.  Without a great deal of increase in the real physical
capital that constitutes the basis for such investments, people are scrambling
to invest in equities, driving stocks to astronomical heights, probably creating
a bubble in the process.

--
Michael Perelman
Economics Department
California State University
Chico, CA 95929

Tel. 530-898-5321
E-Mail michael at ecst.csuchico.edu