The U.S. Stock Market Has Grown, But Manufacturing Has Shrunk: Between 1990 and 2020, the Dow Jones Industrial Average (DJIA or Dow) rose more than tenfold, while U.S. manufacturing employment declined by 5 million jobs—revealing a clear divergence between Wall Street performance and Main Street realities.
Stock Gains Benefit Only a Wealthy Few: The top 10% of Americans own 93% of all U.S. stocks, while the bottom 50% hold just 1%, meaning the vast majority of Americans are unaffected by market surges or slumps.
Corporate Offshoring and Foreign Capital Drive Market Gains: Corporations have boosted stock prices by cutting domestic jobs and offshoring production, while foreign ownership of U.S. equities sits at 17%, inflating asset values without strengthening the real economy.
Real Economic Strength Lies in Rebuilding Production: Recent investments in domestic manufacturing, supported by industrial policy and strategic tariffs, show promise for sustainable job growth—highlighting that market corrections are not crises, but chances to focus on productive economic foundations.
The recent media frenzy over the dip in the stock market has reignited fears of economic instability. Headlines scream of investor jitters, portfolio losses, and economic slowdowns. But here’s the truth: the stock market is not the economy, and it certainly isn’t a proxy for the health of U.S. manufacturing or working-class prosperity. In fact, the divergence between the Dow and U.S. manufacturing jobs has been an on-going theme over the past three decades (figure 1).
From 1990 to 2020, the Dow rose more than tenfold, climbing from around 2,800 to over 30,000. Over that same period, U.S. manufacturing employment dropped from about 17.7 million jobs to just 12.3 million.
The lesson? Wall Street’s performance doesn’t necessarily reflect economic reality—especially for the millions of Americans who were never part of the stock market boom to begin with.
Stock Gains for the Wealthy Few
One of the most persistent myths in American public discourse is that a rising stock market benefits everyone. In reality, only a narrow slice of the population directly benefits. According to Federal Reserve data, the top 10% of Americans own 93% of all stocks. Meanwhile, the bottom 50% hold just 1%. That means half of the country sees little to no direct benefit when the S&P 500 surges (figure 2).
Worse still, the stock market’s inflated performance has become a smokescreen for broader economic dislocation. For the past three decades, policymakers and corporate leaders have touted the market’s rise as evidence of American economic dynamism. But for most people, wages have stagnated, benefits have eroded, and opportunities have narrowed. The prosperity that markets advertise has not trickled down.
Profits Over People: The Wall Street Disconnect
Why the divergence? A big reason is corporate behavior and global capital flows. Under constant pressure to deliver short-term returns, U.S. corporations offshored production to cut costs, slashing American jobs to boost quarterly profits. Offshoring–which accelerated since China joined the World Trade Organization (WTO)–has hollowed out U.S. manufacturing, making the country largely reliant on imports; the U.S. goods trade deficit reached $1.3 trillion in 2024 (figure 3).
Executives and shareholders reaped the benefits of higher profit margins and rising stock prices, even as hometown factories boarded up. The financial sector’s share of U.S. corporate profits now sits at19%. Meanwhile, business investment as a share of GDP has remained relatively flat, while stock buybacks have reached nearly $1 trillion. This reflects misplaced priorities on shareholder returns than on capital reinvestments.
At the same time, trillions in foreign money flooded into U.S. assets, bidding up stock prices and real estate. Foreign investors now own $27 trillion (17%) of U.S. securities, including equities and long-term debt. This influx of global capital has further inflated asset prices, making the market look robust despite a hollowed-out real economy.
The result is a glaring disconnect between Wall Street and reality: soaring stock averages gave an illusion of economic health while industrial communities fell into decline. We’ve been measuring economic success by the stock ticker, ignoring the shuttered factories and displaced workers. It’s a false signal that has led policymakers and the public to misjudge the economy’s true condition.
Don’t Fear the Dip: Real Strength Comes From Rebuilding
The current downturn in the stock market should be viewed not as a crisis, but as a moment of correction—an opportunity to reorient our economic focus away from speculation and toward production. If anything, it’s a chance to stop gauging prosperity by equity indices and start measuring it by tangible metrics like job creation, wage growth, and industrial output.
In fact, recent policy efforts point in the right direction. The CHIPS Act and the Inflation Reduction Act have begun to channel investment into domestic manufacturing. 12.8 million manufacturing jobs were reported at the end of 2024. While still far below the 1979 peak of 19.3 million, it suggests a possible turning point.
But we can’t stop at subsidies. Tariff policy, too, has a role to play. Strategic tariffs—like those imposed on steel and aluminum in 2018—have shown promise in reviving targeted sectors. Domestic steel output rose by 7.6% in two years, and aluminum production by 40%, spurring billions in private investment and thousands of new jobs.
Markets may not like policies that prioritize labor, production, and national resilience—but those are exactly the policies we need. Wall Street’s short-term preferences should not dictate national economic strategy. As our historical data shows, what’s good for stock prices is not always good for American workers.
A Better Economic Compass
Instead of wringing our hands over market fluctuations, we should ask tougher questions: Are we creating good jobs? Are wages keeping up with productivity? Are we rebuilding industrial capacity? The real economy—not the financialized version—depends on our answers.
Wall Street’s recent losses don’t warrant panic. They warrant perspective. It’s time to stop chasing the illusion of prosperity and start investing in the real thing.
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
Wall Street Doesn’t Reflect the Real Economy
by MIHIR TORSEKAR
Idea in Brief
The recent media frenzy over the dip in the stock market has reignited fears of economic instability. Headlines scream of investor jitters, portfolio losses, and economic slowdowns. But here’s the truth: the stock market is not the economy, and it certainly isn’t a proxy for the health of U.S. manufacturing or working-class prosperity. In fact, the divergence between the Dow and U.S. manufacturing jobs has been an on-going theme over the past three decades (figure 1).
From 1990 to 2020, the Dow rose more than tenfold, climbing from around 2,800 to over 30,000. Over that same period, U.S. manufacturing employment dropped from about 17.7 million jobs to just 12.3 million.
The lesson? Wall Street’s performance doesn’t necessarily reflect economic reality—especially for the millions of Americans who were never part of the stock market boom to begin with.
Stock Gains for the Wealthy Few
One of the most persistent myths in American public discourse is that a rising stock market benefits everyone. In reality, only a narrow slice of the population directly benefits. According to Federal Reserve data, the top 10% of Americans own 93% of all stocks. Meanwhile, the bottom 50% hold just 1%. That means half of the country sees little to no direct benefit when the S&P 500 surges (figure 2).
Worse still, the stock market’s inflated performance has become a smokescreen for broader economic dislocation. For the past three decades, policymakers and corporate leaders have touted the market’s rise as evidence of American economic dynamism. But for most people, wages have stagnated, benefits have eroded, and opportunities have narrowed. The prosperity that markets advertise has not trickled down.
Profits Over People: The Wall Street Disconnect
Why the divergence? A big reason is corporate behavior and global capital flows. Under constant pressure to deliver short-term returns, U.S. corporations offshored production to cut costs, slashing American jobs to boost quarterly profits. Offshoring–which accelerated since China joined the World Trade Organization (WTO)–has hollowed out U.S. manufacturing, making the country largely reliant on imports; the U.S. goods trade deficit reached $1.3 trillion in 2024 (figure 3).
Executives and shareholders reaped the benefits of higher profit margins and rising stock prices, even as hometown factories boarded up. The financial sector’s share of U.S. corporate profits now sits at 19%. Meanwhile, business investment as a share of GDP has remained relatively flat, while stock buybacks have reached nearly $1 trillion. This reflects misplaced priorities on shareholder returns than on capital reinvestments.
At the same time, trillions in foreign money flooded into U.S. assets, bidding up stock prices and real estate. Foreign investors now own $27 trillion (17%) of U.S. securities, including equities and long-term debt. This influx of global capital has further inflated asset prices, making the market look robust despite a hollowed-out real economy.
The result is a glaring disconnect between Wall Street and reality: soaring stock averages gave an illusion of economic health while industrial communities fell into decline. We’ve been measuring economic success by the stock ticker, ignoring the shuttered factories and displaced workers. It’s a false signal that has led policymakers and the public to misjudge the economy’s true condition.
Don’t Fear the Dip: Real Strength Comes From Rebuilding
The current downturn in the stock market should be viewed not as a crisis, but as a moment of correction—an opportunity to reorient our economic focus away from speculation and toward production. If anything, it’s a chance to stop gauging prosperity by equity indices and start measuring it by tangible metrics like job creation, wage growth, and industrial output.
In fact, recent policy efforts point in the right direction. The CHIPS Act and the Inflation Reduction Act have begun to channel investment into domestic manufacturing. 12.8 million manufacturing jobs were reported at the end of 2024. While still far below the 1979 peak of 19.3 million, it suggests a possible turning point.
But we can’t stop at subsidies. Tariff policy, too, has a role to play. Strategic tariffs—like those imposed on steel and aluminum in 2018—have shown promise in reviving targeted sectors. Domestic steel output rose by 7.6% in two years, and aluminum production by 40%, spurring billions in private investment and thousands of new jobs.
Markets may not like policies that prioritize labor, production, and national resilience—but those are exactly the policies we need. Wall Street’s short-term preferences should not dictate national economic strategy. As our historical data shows, what’s good for stock prices is not always good for American workers.
A Better Economic Compass
Instead of wringing our hands over market fluctuations, we should ask tougher questions: Are we creating good jobs? Are wages keeping up with productivity? Are we rebuilding industrial capacity? The real economy—not the financialized version—depends on our answers.
Wall Street’s recent losses don’t warrant panic. They warrant perspective. It’s time to stop chasing the illusion of prosperity and start investing in the real thing.
MADE IN AMERICA.
CPA is the leading national, bipartisan organization exclusively representing domestic producers and workers across many industries and sectors of the U.S. economy.
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Wall Street Doesn’t Reflect the Real Economy
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