The stock market can predict future economic conditions. Expected stock returns and the stock/bond return correlation can forecast output and consumption growth, as well as inflation. The VIX can predict consumption growth and inflation monthly, while the price-earnings ratio can predict the future term structure. Higher expected returns indicate higher future growth, while greater risk leads to lower economic activity. Expected returns are better at predicting recessions than actual returns. This information can help predict the economy's direction and shows how financial markets are connected to the economy.