What the stock market correction says about the economy


If you are worried about the nearly 1,700 point drop in Dow Jones industrial average in the past week, you can take some comfort in what economists have long said about the economy and the market: They are only cousins, and likely not even close ones.

That seemed evident a few years ago when the market hit a new all-time high despite the fact that the unemployment rate had barely dropped and the economy’s recovery still looked in doubt. And it seems like the case again today. The economy, pretty much everyone seems to agree, is strengthening. This time it’s the market that looks sick. An economist would tell you not to worry about it. Markets are random, and don’t say much about where the economy is headed.

That is particularly true these days when much of stock market trading is driven by algorithms. Some market observers said it appeared…

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