The Dow Jones Industrial Average reached and then slightly exceeded a top level reached in 2007:
October 9, 2007
March 5, 2013
This caused something of a hoopla in last night’s news coverage and in the headlines this morning. One reason for this is that the Dow Jones, the Nasdaq, and the S&P 500—all of which sum up the stock markets minute-to-minute during work days are the only ever really current statistical indicators. Therefore, certainly in the media, they are taken for an indicator of the Economy. But, of course, the Dow is not the economy. Not really. The speculative reactions of market traders to news of one sort or another, their “sense” or “smell” of what is happening—not in the real economy, where people live, but to the valuations of corporations, most of which are operating world-wide, are not really a measurement that indicates genuine values achieved—except to those who get all of their income from gambling on the market.
Above two real indicators. I’m showing median household income as one, the unemployment rate as another. Both are shown for the 2007 through 2012 period. Median means the household income at the very middle of the distribution. Thus half earn less, half earn more. In 2011, using Census data, the median income was $50,505. The Average household income, which reflects the huge incomes of the top 1 percent, is much higher. In 2011 it was $76,062.
These two indicators show that we are quite a long distance still, five years later, from the performance of the real economy in 2007. In that year the median was $55,039, the unemployment rate at 4.6 percent. In 2012 the corresponding values were $50,964 and 8.1 percent.
Listening to the coverage on Public Television last night, I heard again mentioned that there are two economies. The Dow reports on one, the economy of concentrated wealth. The household income and unemployment data report on the economy of ordinary people. One of the oddities of the laisser faire free market is that, without massive and energetic government intervention, it will trend toward monopoly power. Eventually, of course, when the population is impoverished, it wipes itself out.