The stock market is booming, and the KSE 100 index has almost doubled in the past year. The market is at an all-time high, breaking records. This has excited a small community of investors and they have every reason to celebrate, as the market has finally performed well after many years.

However, it is crucial to differentiate between real economic performance and a booming stock market, as they don’t always move in tandem. This appears to be the case in this boom. In the past few years, while the real economy was performing, the real estate market was booming, but the stock market’s performance was lacklustre. Now, it is catching up.

To give some perspective, despite the index gain, as of Friday’s closing, the last 10-year Compound Annual Growth Rate (CAGR) for the KSE 100 is 10.6%, which doesn’t even cover headline inflation of 10.7% over the last decade. Thus, the market still has some catching up to do.

That said, one must note that the stock market rise is not a barometer of the underlying economy. Real GDP growth is a better indicator, and within it, the quality of growth matters. This helps gauge overall employment and small business growth.

The numbers indicate that growth is missing, consumer discretionary spending is shrinking fast, and investor........

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