Stocks, the up and down

In another critique of Robert Samuelson, who routinely offers himself as “punching bag,” economist Dean Baker writes:

If the economy were to get stronger the unemployment rate would fall to more normal levels. This would increase workers’ bargaining power and likely lead to a drop in profit shares. This means that if traders in stock anticipated stronger growth, it could be associated with a drop in stock prices since the decline in profit shares would more than offset the higher profits associated with higher GDP.

That stocks continue to rise suggests that investors expect feeble economic growth. Hooray, right?

real gdp from 2000 to 2013

S&P quarterly from 2009

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