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"FOMO" makes an entirely natural market process sound problematic. If an investor is confident that the economy will fully recover in 2022, they should be willing to buy stock at a very slight discount from fully recovered today, even if current economic conditions aren't great. That's not a psychological trap, just an efficient market.

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A very slight discount? As of writing, the Nasdaq is at all time high and the S&P only 5% below. All this with depression-level unemployment.

Again, this just seems like a confused perspective. Market indices measure the expected future performance of large companies, not current unemployment rates.

In a consumer-driven economy, current unemployment rates are inextricably linked to the expected future performance of large companies.

Unfortunately the people that are unemployed because of all this aren’t (in general) that important to the economy. This will only further push class disparity.

Something can be both rational and problematic.

Certainly, but I'd argue the problem is entirely with people's expectations. Stock market indexes were never an appropriate tool to measure current economic health. If we want a numeric tool to measure what things are like right now, we have to build one, because yelling at the S&P 500 to whip it into shape won't work.

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