This report carried in the Washington Business Journal typified yesterday's coverage of yet another decline in the stock market:
Dow declines further still
Wall Street’s major stock indexes followed Monday’s strong sell-off with a day of fluctuation, ending with more losses.
The Dow Jones Industrials Average gyrated between modest gains and losses throughout the trading day, ending the down 37 points, or 0.55 percent, to close at 6,726. Monday’s fall below 7,000 sent the Dow to its lowest level since April 1997.
The Standard & Poor’s 500 Index ended Tuesday trading down 4.49 to 696, it first close below the 700 level since October 1996. The Nasdaq Composite Index ended Tuesday’s session down 1.84 to 1321.
But after considering inflation, the markets are, in real terms, stuck at 1995 values, as shown in the following chart:
The gray areas show how the indices compare to prior year-end values. In nominal terms, the Dow and the NASDAQ are back to levels achieved during 1997, while the S&P 500 has already fallen back to where it was (as indicated above) in October 1996.
But in real terms, all three indices are back at levels achieved during 1995. The S&P 500 isn't that far from falling back into 1994 (yesterday's close of 696 vs. 12/31/1994 close of 650).
That is significant. 1995 was the beginning of the markets' remarkable bull run, which was fueled primarily by the Gingrich Congress's (relative) spending restraint, followed by the GOP-inspired welfare reform (which then pushed a half-million additional workers into employment per year from 1997-2000), followed by the 1997 capital-gains tax cut (which Treasury Secretary Bob Rubin, now nicknamed Bailout Bob, resisted).
The inflation adjustments reveal that the Obama Economy has taken us to a point where nearly all of the gains in value achieved from 1995-2007 have been virtually wiped out.
This narrative may explain why there's not a lot of evidence that the press is interested in getting real, so to speak, when comparing historical stock values.
Cross-posted at BizzyBlog.com.
—Tom Blumer is president of a training and development company in Mason, Ohio, and is a contributing editor to NewsBusters
Editor at Large
Comments Policy
Trading like it's
March 4, 2009 - 10:01 ET by Scuba DudeTrading like it's 1995?
Looks like The One really is bringing back the Clintons years. But with the way he and his administration is handling this I foresee the market reflecting the Carter years.
→ Carter years
March 4, 2009 - 10:08 ET by Cool ArrowAhh, those were the days, comerade!
Weren't those sweaters cozy?
We won the cold war! Why did we surrender?
CA, I remember getting on
March 4, 2009 - 10:10 ET by Scuba DudeCA,
I remember getting on my bicycle with a gas can and going to the gas station so I could get some fuel for my dad so he did not have to wait on those lines. : )
Your life
March 4, 2009 - 10:12 ET by jed58"Barack will never allow you to go back to your lives as usual"
Hey, that is not so bad when ...
March 4, 2009 - 10:50 ET by legacyrepublicanyou consider that they are now saying the medium priced home in Detroit is $7,500.
Ah, the way liberalism builds wealth is so ... STUPID!
Will get worse
March 4, 2009 - 11:36 ET by Gat New YorkObama does not have any comprehension of economics other than the socialist tenents he picked up along the way.
Recessions are a natural recurring event in an economic cycle in free market capitalism. It is false to believe that Presidents cause recessions or end recessions - the market does all that.
Economic cycles are like eating. A person will eat as much as their stomach will allow and then no more. A market will increase in value until it is overstuffed in value. At that point the market recedes to find its value base before growing again.
However, what recessions do expose is systemic problems that need repair.
While the recession will take care of itself, the systemic problems do require intervention. The systemic problem we faced were bad mortgage practices that compiled over decades to the point where they affected the entire credit market and the entire banking system. That is the only thing that required fixing - not the tax codes or roads/bridges or healthcare reform or cap and trades.
By having too much government intervention into irrelevant areas will cause investors to keep their money in gold and mattresses. It will also have government printing too much money which will set off a massive wave of inflation.
What I find most ironic is that the two worst culprits of government excess with the mortgage mess - Barney Frank and Chris Dodd - are the two incharge of fixing it. And to watch the two biggest tax cheats - Geithner and Rangel - threatening to go after tax cheats.
If McCain was President,
March 4, 2009 - 13:36 ET by CoolShadesIf McCain was President, this would be the lead story and majority of the news cycle. Instead, the MSM is avoiding this topic and picking up trivial and out-of-context statements made by Limbaugh. And RNC Chairman Michael Steele is gullibly being suckered into the trap. We've found out he doesn't have the ability to call out the MSM on what exactly Limbaugh was talking about when he stated he wanted Obama to fail. It was a perfect opportunity to denounce Obama's economic policies one by one. But, instead, he tried to pacify the media which eventually landed him in the trap.
The RNC should be doing what the MSM would be doing if McCain was President: Critizing the presidential economic policies and using the decline of the stock market as proof.