Dow Jones Pacing Up To Record High Amid Chronic Unemployment
With a Dow Jones rally that is showing some signs of economic recovery, the stock markets are bouncing back despite the stark difference between the rise of the index versus unemployment rates and real wages earned. Traditionally, the Dow Jones was used as a measure of the economy despite the disconnect with unemployment; while the Dow Jones Industrial Average has risen up to 14,250 points at one point Tuesday morning, unemployment is still stuck at 7.9%.
While there are other measures of the stock market such as the S&P 500 which can be more accurate, the Dow Jones only includes 30 companies, and is weighted only by the price of the stock and not of the companies they represent as a whole. While for Wall Street there is some celebration going on, there is the idea that some of it is artificially inflated due to the Federal Reserve pumping billions of dollars into financial institutions known as Quantitative Easing. The Federal Reserve has indicated that it will indefinitely maintain this monetary policy in the future, pumping the markets artificially for the hope that larger banks will loan out the money to consumers to recover the housing market and other affected markets.
Huffington Post Article: Dow Hits Record High: Here’s Why It Doesn’t Matter
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Masa D. Rodriguez
