The Investopedia Anxiety Index, a measure of our readers’ concerns about market and economic related issues, and the 澳洲幸运5官方开奖结果体彩网:CBOE Volatility Index (VIX), otherwise known as the “Fear Gauge,” have historically been closely correlated. The Anxiety Index typically increases ahead of the VIX as investors attempt to learn w෴hat is happening before they take action in their portfolios. That has been consistent since the last financial crisis, and every peak and valley in between.

But the last several weeks have revealed a notable divergence between the two as anxiety, especially around personal finance related issues, has spiked, just as markets-based anxiety has subsided. It’s not surprising that has come on the heels of April’s 14% rise in the S&P 500,꧟ while some 24 million Americans filed for unemployment. 

If April was the month that the stock market and the U.S. economy compꩲletely diverged, May has brought on a wave of anxiety tied to personal finance fears as the realities of this recession set in. 

Anxiety was spiking around terms like 澳洲幸运5官方开奖结果体彩网:bankruptcy, 澳洲幸运5官方开奖结果体彩网:foreclosure, 澳洲幸运5官方开奖结果体彩网:forbearance, 澳洲幸运5官方开奖结果体彩网:unemployment, and 澳洲幸运5官方开奖结果体彩网:liquidity. This shows us that the economic 𒅌crisis brought on by the global pandemic has become 𒅌very personal for individuals and investors, as they face potentially life-altering financial decisions. 

These were among the top articles and terms 🐻that have been spiking over the past two weeks🍃:

• What is P💯andemic Emergency Unemployment💝 Compensation?
• 澳洲幸运5官方开奖结果体彩网:What is Severance Pay?
• 澳洲幸运5官方开奖结果体彩网:What is a Real Estate Short Sale?
• 澳洲幸运5官方开奖结果体彩网:What is Bankruptcy?

What the VIX May Be Missing

The VIX, or CBOE Volatility Index, is a measure of future volatility expectations as seen through the options market. The more active it is, the more wild swings are likely to appear in the stock market in the near future. Volatility in the stock m🦹arket cooled from a raging bonfire in March to a simmering BBQ in April as stockꦯs climbed from steep losses. 

The collapse in oil prices in April reignited investors' animal spirits, but they settled as prices climbed. But April brought millions of unemployment claims, furloughs, and business closures. Even though stimulus checks went out to millions of Americans, the reality of a deep recession was becoming more evident. Indeed, first-quarter U.S. GDP sank 4.8%, a foreshadowing of a steeper downturn on the horizon.

The Personal Economy is Crumbling

Inside households, spending dropped (except for food), and mortgage delinquencies and missed rent payments climbed. According to TransUnion , hardship loans are on the rise for credit card and car payments in April, a trend likely to increase. Meanwhile, banks took on more loan loss provisions to bolster against bankruptcies and missed loan payments. Many small businesses decided to forego 澳洲幸运5官方开奖结果体彩网:PPP loans, lay off workers, and plan to reopen with diminished headcounts if and when they get the green lig♛ht. While many laid off workers claimed their job losses were temporary, the realities inside their former employers may be telling a different story. 

Whiꩲle the stock market’s recovery has give🅠n confidence to the investing class, the realities of the economic damage brought on by the shutdown are painting a very different picture. It took the U.S. labor force six years to go from 10% unemployment at the height of the great financial crisis, to 5% in 2016.

With U.S. unemploymeꦗnt expected to top 25% - the highest mark since the Great Depression, the road back may be long, bumpy, and winding. That is bringing about a rethinking of risk, and a battening down of the hatches among Americans, especially older o🐻nes who are taking a very conservative approach to investing their money. 

What’s Next for the Stock Market?

That is, of course, the $10 trillion question. It is not unusual for the stock market to spike after a 🃏steep correction. To wit, the S&a🍬mp;P 500 has climbed 32% in 40 trading days, an astounding rebound by any measure. That has many big investors calling this a bear market rally, and decrying sky-high valuations for stocks.

That rally has been built upon an 澳洲幸运5官方开奖结果体彩网:extremely accommodative Federal Re⛦serve that has poured money into government securities and corporate debt, with plans to spend even more than the $1.5 trillion it has already committed. While that has stabilized financial markets for the time being, the collapse of personal finances for millions of out-of-work Ameri🍨cans may be more than it can handle. That’s why the Fed has been goading U.S. lawmakers to pass more stimulus measures, stat.

The split between the Anxiety Index and the VIX is telling us that the stock ✃market and its participants ꦕare not hearing this message, or choosing to ignore it. 

That could be costly.

[Charts by D. Zura💜well, W. Wi🌳lliams, and A. Morelli]