In recent years, policymakers have increasingly treated stock market indices as proxy variables for economic success — a shift that risks mistaking financial signals for comprehensive measures of prosperity. Equity markets undoubtedly convey valuable information: they aggregate expectations about future earnings, interest rates, and risk, and therefore serve as forward-looking indicators of investor sentiment. But a proxy is not a full model of reality. When political narratives lean too heavily on market performance, they blur the distinction between a narrow financial signal and the broader, more complex system it imperfectly reflects.

Few economic institutions command as much attention as the stock market, and the fascination is understandable. Over long horizons, equity markets have proven remarkably effective at allocating capital, rewarding innovation, and translating dispersed knowledge into prices. Yet indices are frequently misunderstood — praised when convenient, dismissed when inconvenient, and increasingly invoked as shorthand for economic health even when they capture only a subset of underlying conditions. The result is a form of analytical compression, where a single number comes to stand in for the diverse experiences of households, firms, and regions.

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