Justin Wolfers Calls S&P 500 Obsession 'Economic Illiteracy' Despite Wall Street Records

Despite record-breaking numbers on Wall Street, University of Michigan professor Justin Wolfers is urging Americans to look past the headlines, slamming the media's fixation on S&P 500 highs as “economic illiteracy.”

The Global Context Gap

Speaking to MS NOW, Wolfers argued that celebrating the U.S. stock market’s recent performance ignores a critical global reality.

While the S&P 500 has risen, Wolfers pointed out that global markets excluding the U.S. have surged by 30% over the past year. By comparison, American markets have grown by roughly 18%.

“We've underperformed the global market by 12%,” Wolfers noted, describing it as a “miserable year for the American investor” when benchmarked against international peers. He contends that without this context, the media presents a distorted view of domestic economic health.

See Also: GDP ‘Nowhere Near’ 4.3%: Rosenberg Dismisses Q3 Report As ‘Fugazi,’ Pegs Real Growth At 0.8%

Noisy Data And Mixed Signals

Beyond the stock market, Wolfers warned that key economic indicators are currently “messy” and contradictory. At the same time, third-quarter GDP surged by over 4%, a separate measure known as Gross Domestic Income (GDI) showed a much more modest 2.4% growth.

Wolfers highlighted a stark disconnect between output and labor, noting that despite high production numbers, employment growth has “plummeted.” He cautioned that early data often gets revised and that the current numbers fail to tell a consistent story of prosperity.

A K-Shaped Reality

The commentary aligns with concerns raised by CNBC contributor Ron Insana regarding a bifurcated economy. While the wealthiest Americans benefit from asset appreciation, data shows lower-income households are increasingly relying on “buy now, pay later” services for holiday shopping.

“If you don’t own stocks, the suffering is real,” Insana added, reinforcing Wolfers’ assertion that top-line market numbers often mask the financial strain facing the broader public.

US Benchmarks Begin Santa Claus Rally

On Christmas Eve, both the S&P 500 and Dow Jones indices ended at a record close. The S&P 500 was 18.12% higher, whereas the Nasdaq Composite and Dow Jones gained 22.47% and 14.95%, respectively, on a year-to-date basis.

The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, closed higher on Wednesday. The SPY was up 0.35% at $690.38, while the QQQ advanced 0.29% to $623.93, according to Benzinga Pro data.

The futures of Dow Jones, S&P 500, and Nasdaq 100 indices were lower on Friday.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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