Top economist says stock market has gotten ‘increasingly disconnected from the economy’

Fortune

by Tristan Bove

February 24, 2026

AI-Generated Deep Dive Summary

Mark Zandi, chief economist at Moody’s Analytics, has raised concerns about the growing disconnect between financial markets and the broader economy. While stock markets have performed strongly in recent years, driven by factors such as speculative activity, high valuations, and investor optimism, the underlying economic reality appears increasingly divergent. Zandi warns that this divergence poses significant risks to an already fragile economy. He notes that real GDP growth in the U.S. slowed sharply to 1.4% in the last quarter of 2025, far below its potential of around 2.5%. Despite positive job market indicators, such as a slight decline in unemployment and strong hiring numbers, revised estimates suggest minimal job growth in 2025, further highlighting economic stagnation. Zandi attributes much of this disconnect to speculative behavior in financial markets, particularly in tech-heavy sectors, where massive investments in artificial intelligence are often driven by future expectations rather than immediate returns. While investors may view recent market performance as justification for optimism, Zandi cautions that such reliance on speculation could lead to a significant market correction. He emphasizes the potential consequences of a market collapse, including reduced consumer spending and business cutbacks, which would disproportionately impact the economy given that the top 10% of earners account for roughly half of all spending. This disconnect between financial markets and economic fundamentals is particularly concerning, as it creates a volatile environment prone to sudden reversals. External shocks, such as trade tensions or geopolitical events, could exacerbate an already vulnerable situation. Zandi’s warning underscores the importance of aligning market dynamics with broader economic health, as any meaningful correction in asset prices would likely have far-reaching implications for businesses and consumers alike. For readers interested in business and finance, this issue highlights the delicate balance between market performance and economic stability. While financial markets can reflect economic conditions, their current trajectory raises questions about sustainability and risks to long-term growth. Zandi’s insights serve as a reminder of the interconnectedness of financial and economic systems, and the potential fallout when they become increasingly misaligned.

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Originally published on Fortune on 2/24/2026