What Is Main Street?

Main Street is a colloquial term used by economists to refer collectively to America's independent small businesses. It gets its name from a common name for the principal commercial street of small towns across the country. In England, the equivalent term is High Street.

In another context, the term Main Street is used in contrast to Wall Street, with the latter referring to big business and high finance. Nevertheless, those involved in big business and high finance spend a considerable amount of time trying to understand what products, fashions, brands, and trends succeed or fail on Main Street.

More generally, the term Main Street has been used for many years to refer to small-town American values and traditions. "Main Street, U.S.A." has been invoked in Disneyland and in many other contexts to mean old-fashioned American wholesomeness.

Key Takeaways

  • The term Main Street is used in many contexts, but it always means local.
  • Local businesses, consumers, and financial services firms may be referred to as Main Street.
  • The polar opposite of Main Street is Wall Street and the big financial firms and global corporations it represents.

Understanding Main Street

Main Street may be the most common street name in the United States, with 10,902 streets from coast to coast actually bearing that name, according to a Reddit post quoted on fivethirtyeight.com, which could not confirm the accuracy of the data.

In the financial world, Main Street is often cited as the opposite of Wall Street. That is, it may be used to describe the individual small investor as opposed to the professional securities trader.

The term Main Street may refer to an independently owned firm as opposed to a global corporation.

This can lead to some very unpleasant attitudes on one side or both. For example, some Wall Street traders stereotype Main Street investors as dabblers in a game they can't understand. Main Street investors may see Wall Street traders as crooks with a void where their souls are supposed to be.

The unfortunate fact is that both sides have a high degree of dependence on the other. Wall Street depends on individual investors to generate the capital and fees that keep the lights on. Main Street needs Wall Street to earn a better rate of return than a savings account or a municipal bond can offer.

Unfortunately, this mutual dependence doesn't resolve the conflicts between the two. 

Main Street vs. Wall Street

Main Street may also be used to describe a small, independent investment company as opposed to one of the globally recognized Wall Street investment firms. Wall Street firms tend to serve institutions and large investors with multi-million dollar assets. Main Street firms provide personalized financial planning and investing services to professionals and families in their locale.

Some people insist that what's good for Wall Street is bad for Main Street and vice versa. For example, regulations designed to protect Main Street investors are seen as hampering Wall Street's ability to innovate and profit. On the other hand, Wall Street compensation practices and trading strategies are seen as encouraging short-term results and greater risk taking.

Of course, when Wall Street and Main Street do work together, things can go horribly wrong. This was seen in the financial crisis that hit in 2008, when lenders and borrowers on Main Street created a bubble in housing prices that burst on Wall Street. The result was called the Great Recession. So, we want Main Street and Wall Street to get along, but perhaps not too well.