BPEA | 1975 No. 2

The Stock Market and the Economy

1975, No. 2

THE STOCK MARKET decline of 1973-74 marked the longest and steepest
fall in corporate-stock prices since the depression of the 1930s. The loss of
stockholder wealth in market prices amounted to $525 billion, or 43 percent.
The magnitude of this decline in stock values, in conjunction with the
subsequent collapse of aggregate demand in 1974-75, has sparked a renewed
discussion of the role of the stock market in business cycles.