So the Dow is at a record high, after five and a half years of a staggering recovery. What does this mean though? It means that corporate juggernauts are back to full growth potential at the price of high unemployment. The last time the Dow was this high, unemployment rates were between four and five percent, whereas today we are close to 8 (probably significantly higher too, as this doesn’t count long term unemployed. In fact, with the sequester going into full affect and a large number of people losing their federal assistance, watch and see how the unemployment numbers start to drop even more over the next couple of months – it’ll be magic!) So really what this means is that big company’s are making more, with less, and isn’t that just great?
Maybe. Large profits with no one to give it to makes big company’s fidgety, specifically the shareholders. It could prompt a new wave of investment and innovation, which would ultimately lower the real unemployment rate which is ultimately what is best for the economy. At the same time though, nothing has really changed from a year ago – almost all the company’s on the Dow haven’t shifted strategies, and their profit potentials are exactly the same (which is what the Dow is a measurement of). While this record high may be the confidence needed to increase investment in this economy, it’s not a good measurement of anything really. We’re still a country with a debt crisis, we’re still looking at greater-than-inflation health care costs, a looming higher education bubble, and finally levels of income inequality at levels not last seen since before the Great Depression. The Dow’s arbitrary high is nothing but false hope in an unsustainable economy if you ask me.
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