Economist and former Labor Secretary, Robert Reich, notes that:
When the Dow rises precipitously, as it did today (Wednesday), the business press predicts an end to the Great Recession. When the stock market plummets, as it did last week, the Great Recession is said to be worsening.
Pay no attention. The stock market has as much to do with the real economy as the weather has to do with geology. Day by day there’s no relationship at all. Over time, weather and geology interact but the results aren’t evident for many years. The biggest impact of the weather is on peoples’ moods, as are the daily ups and downs of the market.
The real economy is jobs and paychecks, what people buy and what they sell.
American consumers aren’t buying much of anything because they’ve lost their jobs or are worried about losing them, and are still trying to get out from under a huge debt load.
The U.S. housing market is growing worse, auto and retail sales are dropping, and the ranks of the jobless continue to swell. (Source)