Ah, 2024—another banner year for the stock market! The S&P 500 surged an impressive 28%, marking its best back-to-back gains since the ’90s. Not only did the tech behemoths—the so-called “Magnificent Seven” (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, Tesla)—deliver massive returns, but economically sensitive stocks and the Russell 2000 small-cap index also saw stellar growth. And it doesn’t stop there. Analysts are predicting more gains for 2025, with forecasts for the S&P climbing as high as 7000.
But here’s the kicker: while Wall Street pops the champagne, many everyday Americans are asking, “If the economy’s so great, why does it feel so bad?”
Let’s dig into the disconnect—and what can actually be done about it.
The Reality Check: A Stock Market Boom Isn’t a Universal Win
A rising stock market sounds like great news, and for some, it is. Retirement accounts grow, consumer confidence gets a boost, and thriving corporations can mean more jobs. But for millions of people, those gains feel like they belong in a parallel universe.
Here’s why:
- The Wealth Gap: Stock market gains overwhelmingly benefit higher-income households, who own the bulk of stocks. If you don’t have a 401(k) or investments, Wall Street’s success feels like someone else’s party.
- Inflation and Rising Costs: Even though inflation is cooling, living costs are still high. Wages haven’t kept up with the cost of essentials like housing, groceries, and healthcare.
- High Interest Rates: Borrowing costs for mortgages, car loans, and small businesses remain steep thanks to Federal Reserve rate hikes.
- Disconnected Realities: Stock performance reflects corporate earnings and investor confidence—not how affordable life feels.
In short, the market’s record-breaking year is a great headline, but it doesn’t pay the bills, lower your rent, or make your weekly grocery haul any cheaper.
Policies That Could Bridge the Gap
The good news? There are ways to ensure that a healthy stock market translates to a healthier economy for everyone—not just investors.
Here’s what could help:
Boost Wages and Jobs
- Raise the Minimum Wage: Gradual increases tied to inflation could help people keep up with rising costs.
- Job Creation Incentives: Encourage businesses to invest in domestic jobs, especially in underserved communities.
Make Essentials More Affordable
- Affordable Housing: Expand housing supply and offer incentives for developers to create more affordable options.
- Lower Healthcare Costs: Policies aimed at reducing drug prices, healthcare premiums, medical procedure costs, and the outrageous charges from hospitals and medical institutions could significantly increase household spending power. Did you know that healthcare costs are the leading cause of bankruptcy in the United States, accounting for 66% of all filings? Shockingly, most of these bankruptcies involve fully insured individuals!
Help Everyone Build Wealth
- Expand Retirement Savings Access: Make it easier for workers to save for retirement by automatically enrolling them in 401(k)s or similar programs.
- Financial Literacy: Teach people how to invest and manage money, so more Americans can benefit from market gains.
Support Small Businesses
- Low-Interest Loans: Help small businesses grow and compete by expanding access to affordable capital.
- Streamline Regulations: Simplify red tape so small businesses can thrive alongside corporate giants.
Address Income Inequality
- Progressive Tax Reforms: Ensure those reaping the biggest stock market rewards contribute to public infrastructure and services. Did you know: According to ITEP’s 2015 Who Pays? report, the poorest 20% of Americans pay 10.9% of their income in state and local taxes. In comparison, middle-income taxpayers pay 9.4%, while the wealthiest 1% pay just 5.4% of their income in state and local taxes.
- Expand Tax Credits: Programs like the Earned Income Tax Credit can put more money in the pockets of lower- and middle-income families.
Invest in Sustainable Growth
- Green Energy Jobs: Investments in renewable energy can create new job opportunities while lowering energy costs.
- Workforce Training: Prepare workers for jobs in growing industries like tech and healthcare.
Can We Close the Gap?
The stock market and the everyday economy don’t have to live on separate planets. With thoughtful policies, it’s possible to strengthen the connection between Wall Street’s success and Main Street’s well-being.
Because let’s face it: a booming market is great, but it’s even better when everyone gets to join the party. We can and should definitely do better!
