Historically, the stock market has bottomed out long before the worst of the economic data unfolded, such as unemployment numbers. A stock market crash can devastate the economy. But in truth, it is about the willingness of buyers and sellers at that time to accept … Crashes can lead to a bear market. Most famously, the stock market crash of 1929 was a key factor in precipitating the great depression of the 1930s. The stock market is also often driven by narrative and not necessarily how the economy is doing objectively. A collapse in share prices has the potential to cause widespread economic disruption. So when people talk … Yet, daily movements in the stock market can also have less impact on the economy than we … A stock market crash can also cause a recession. Movements in the stock market can have a profound economic impact on the economy and individual consumers. That's when the market falls 10% beyond a correction for a total decline of 20% or more. The increase and decrease in stock prices can influence numerous factors in the economy such as consumer and business confidence How does a stock market crash affect the economy? “Narrative pulls investor dollars in or it scares [them] out, and the prevailing narrative can change in a hurry,” Carlton said. Like the U.S. stock market, returns of global stocks depend on multiple factors, many of which are outside the control of any administration. “We always attribute gains and losses to something concrete, like China or retail sales. 5  Stocks are an important source of cash that corporations use to manage and grow their businesses.