The economy and the stock market have a strong, consistent relationship, but the stock market generally turns before the economy does.

Question

Quizplus · Accepted Answer

The stock market is often viewed as a leading indicator of the economy because it tends to anticipate changes in economic conditions before they actually occur. Although the stock market and the economy are interrelated, changes in economic indicators such as GDP and employment may take some time to filter through to the stock market. As such, the stock market often reacts to news and other events before the economy does.

The Economy and the Stock Market Have a Strong, Consistent