The Economy

Well who isn't a little worried about the current economy? Today things seem even more shaky then usual. News agencies are quick to point towards doomsday as the Dow drops 775 points today. This leaves a lingering question, How much is 775 points in realtion to the market as a whole? What do these numbers look like on a long term scale? Perhaps I can helpt with that.

Let's start with a chart for the Dow for the last year. Using the previous link you can see that for the year the market is definately headed in a downward direction. If you look at this year alone, the market drop in the market by 28%. Now 28% is a alot. How do these numbers relate to Dow in the Last five years?

Here is the chart for the last five years. As you can see we are still up by nearly 1000 points from where we were in 2003. How does that relate in the market since the Great Depression?

Here is the chart for the last 80 years. At the bottom of the Great Depression the Dow was 42, now it is 10,403. It appears to me that the consumer inconfidence prodded by the media is about the only think that can make our current situation lead us into a new Depression. All previous quaters this year have show positive growth rate in the economy, yet the media continued to cry Depression or Recession. Irresponsible Congress people stood in front of the media and labelled institutions as failing. Amazingly they fell. The way to save an entity with a falling value is to support it and label it as hopeless. These instances were self fulfilling prophecies. We run the risk of the media creating another self fulfilling prophecy, a true long term Recession or Depression because of lost consumer confidence.

In a final attempt to put it in perspective according to the previous chart, between 1929 and 1932 the Dow fell 3058 points or about 98.6%. If you refer to the chart from before for the last five years, since 2003 the Dow is still up 1000 points or so, or a gain in the five years of nearly 11%.