Ep. 2329 - Our Totally Schizophrenic Economy
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Why do Americans feel uneasy about the economy despite positive numbers?
A lot of the economic numbers look really good, so why do many Americans feel so bad about the economy? Plus, another terrible crime story out of Charlotte, North Carolina, and the Somali-American fraud scandal continues to percolate. First, this is it, the last day to get 50% off your new annual Daily Wire Plus membership. Let me repeat that, 50% off Daily Wire Plus annual memberships. That ends... Tonight, tonight, it is our best deal of the year. Gotta lock it in right now, get everything we make, including the incredible seven-part series, The Pendragon Cycle, Rise of the Merlin, 50% off DailyWire Plus annual memberships. Will not return for another year. Do not miss this deal. Join now at dailywire.com slash subscribe.
Well, folks, it feels as though there is a gigantic disconnect between how the stock market is actually doing, how the economy is actually doing, and people's feelings about the economy. If you look at the statistics right now, the overall inflation rate in the United States is around 3%. That's 50% higher than the Fed's target rate, but it is, in fact, a sort of moderate inflation rate for American history. It's higher than it has been for the course of the last couple of decades when we had unusually low inflation rates, but it is not. 8, 10%. If you look at the overall unemployment rate in the United States, it is currently 4.4%. That is a historically low rate. If you look at the average across the last 50 years of American history, what you see is that the average unemployment rate in the United States is closer to 6%.
And of course, if you looked this morning at the opening of the Dow Jones Industrial Average, the Dow Jones opened Nearly 48,000, which of course is historically high, very high. And in fact, the Dow Jones is up year on year about 8%. Okay, so these are big booming numbers. These are good numbers for the economy just overall. And there's reason to believe that the stock market is actually going to increase from here, even if... People like me say that there is a bubble and that that bubble will inevitably burst because whenever you have a major new technology like, say, AI, there's an enormous amount of spending that goes into that new tech, big build-out, more investment, many companies. And then...
The expectations are not met by reality. There's a bit of a bust, but the best companies survive and end up transforming the economy. That's the story with the automobile industry. That's the story with the internet. It's the story, I think, also with AI. Even with that said, we may be in for a ride before that bubble bursts at all. As the Wall Street Journal points out, there are many factors that are currently leading to wild bull market optimism on Wall Street. According to the Wall Street Journal, there are five factors that suggest that Then investors are feeling pretty good about the stock market. One, stock valuations could be worse.
What factors contribute to the disconnect between economic performance and public perception?
Stocks currently look very expensive, like price-to-earnings ratios, which is what I talk about. The price-to-earnings ratios right now are totally out of whack for companies like, for example, Tesla. Tesla's earnings on an annualized basis represent a tiny fraction of its actual stock valuation. But... The stock valuation of Tesla is not based on how many cars it's selling. It's based on its AI play. It's based on a robotics play. It's based on a wide variety of experimental plays people figure are going to pay off in the long run. And so looking at their car sales is not a good proxy, says Tesla, for what the company is actually worth. Many Wall Street analysts think that the best way to value stocks is to compare their earnings yield, that's their earnings to price ratio expressed as a percentage, with yields on ultra-safe government bonds.
One popular version of that metric, known as the excess CAPE yield, uses S&P 500 companies' average earnings from the past 10 years and adjusts both those earnings and the 10-year treasury yield for inflation. As of November, it stood at 1.7%. That is low by historical standards, suggesting the high prices of stock have shrunk the reward for owning them over bonds, but it's not unprecedented.
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Chapters
8 chapters
1
Why do Americans feel uneasy about the economy despite positive numbers?
0:00–2:36
2
What factors contribute to the disconnect between economic performance and public perception?
2:36–4:06
3
How is inflation affecting American households today?
4:06–5:14
4
What role does unemployment play in the current economic landscape?
5:14–12:30
5
How does President Trump's messaging address economic concerns?
12:30–14:19
6
What are the implications of crime stories for political narratives?
14:19–16:45
7
How is immigration policy impacting local communities?
16:45–20:42
8
What potential changes are being discussed regarding Homeland Security leadership?
20:42–57:55
Speakers
8 identifiedMore from The Ben Shapiro Show
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