The Flinchum File

Thoughtful Economic Analysis and Existential Opinions
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Linking the Stock Market with the Economy

Long-time readers know whenever there is a lull in blog posting, there is a column in the near future.  And, here it is: 
In this quarterly column for Inside Business, I discuss economic and investment performance during the first quarter and offer thoughts on the second quarter.  The question posed in this column is:  How can the stock market do so much better than the underlying economy?  One answer is that the stock market predicts the future economy while the economic data reflects past economic conditions.  In other words, the stock market looks through the front windshield, while economic data looks in the rear-view mirror.  This suggests good times are coming.  
However, it is more likely that the wedge separating the stock market from the economy is the Fed, which may have done a great job of holding up the economy in the short term but may be producing great inflation in the long term.  We’ll see . . .