(Emmanuel Dunand/AFP/GettyImages)

The Dow Jones industrial average rocketed to a record high this week, the highest since the recession. Is this a sign our economy is recovering? Or is it just a short-term spike? We talk about what this means for the economy, market growth, jobs, housing and the road ahead.

Guests:
Kathleen Pender, business columnist for The San Francisco Chronicle
Peter Coy, economics editor for Bloomberg Businessweek
Scott Anderson, senior vice president and chief economist for Bank of the West

  • A easy way to make a dent in the american unemployment rate, is to issue fewer foreign worker visas. It’s a matter of supply and demand.

  • GiorgioOrwell2nd

    The stock markets are completely disconnected from the real economy and have been for quite some time. Any honest economist or even rational hedge fund manager knows this. The nominal number of the DOW no longer has any relevance to the health of the US economy, and is entirely driven by the so called “Fed put”, and the vast amount of the Feds newly created money (and thus inflation, which isn’t tracked properly anymore) being funneled to the primary dealers on Wall Street. The Feds actions have completely broken the original price discovery and risk assessment function of the stock market. Why else would the markets dive on days where it is even mildly suggested that the Fed is going to pull back on it’s easy money policies. None of the increase in profit margins that companies have achieved in the past 5 years are sustainable. The “wealth effect” constantly mentioned as good news every day the markets tick higher, is pathetically minimal for the vast majority of the middle classes. Alan Greenspan admitted as much recently in a CNBC interview saying that the situation is now reversed where the markets are dictating the economy, and not the reverse which is what markets are supposed to do.

  • HenryGeorge

    Why would anybody but a callous greed-head or a complete fool think that just because the 1%’s stock investments have grown, that somehow the whole country, which by the way includes the 99%, is doing any better? Decades of decline are not undone just because the 1%’s trading computers generate a blip in the stock market, especially since these computer perform 70% of all trades on the stock exchanges and a software glitch can easily generate such a blip. We know that wages have stagnated for the past 40 years for the vast majority of Americans while the value of the dollar has sunk enormously decade after decade and our debts public and private have skyrocketed. Only the 1% have reason to celebrate, and only because they have screwed the rest of us over hugely.

  • Ravi

    While many Americans complain that stock prices don’t reflect the true state of the American economy, which is suffering from high unemployment and slow growth, the fact is that most American companies are now global and get most of their profits from emerging economies, which are still showing signs of strong growth. This is the primary reason why the American companies are still showing large profits.

  • Cathy

    Has the recent larger company mergers had much impact? If so, how long will that last?

  • Guest

    I doubt it will occur to host or guests to clarify for listeners that the term “real economy” is an economic technical term which has nothing to do with the economy experienced by a typical household.

    Wikipedia: “Due to the growing importance of the financial sector in modern times,[1] the term real economy is used by analysts[2][3] as well as politicians[4] to denote the part of the economy that is concerned with actually producing goods and services,[5] as ostensibly contrasted with the paper economy, or the financial side of the economy,[6] which is concerned with buying and selling on the financial markets.”

  • steve

    We are suffering the cross currents of two trends – the traditional recovery from a deep recession – typical business cycle stuff AND the secular trends of globalization and increased productivity. Very difficult to formulate policy with these twins causing havoc.

  • Overall stock valuations reflect the ebb and flow of capital in/out of the equity markets. Individual stock valuations are often not based on expectations for company profit or dividends as much as expectations about what the next investor will be willing to pay.

    Establishing a reasonable valuation for companies that are private or thinly traded is driven by the same expectation. For a private company, its based on expectations for an IPO or being acquired.

    I’m using http://www.fairsharemodel.com to “crowd vet” ideas I have for a performance-based capital structure that companies could use to raise venture capital via a public offering. It’s called the Fairshare Model and I welcome critical review by anyone interested in ways to improve small company access to capital. The model seeks to establish a new relationship between the providers of capital and those who make it worth more (labor).

  • Selostaja

    Cheering about the record highs of the stock market seems to be similar to getting excited about the huge contracts given to athletes. Maybe their clothing line may sell more shirts but I don’t see a change in my life. How does this help the majority of us who are barely making it on low wages and don’t have enough to invest in stocks? Should we be hopeful for crumbs falling from the plates of glutinous corporations?

    • Guest

      Good question, this is a rather technical discussion isn’t it? (I especially like your comparison of wealthy investors to athletes.) They are discussing very abstract concepts today. As I posted below:

      “I doubt it will occur to host or guests to clarify for listeners that the term “real economy” is an economic technical term which has nothing to do with the economy experienced by a typical household.

      Wikipedia: ‘Due to the growing importance of the financial sector in modern times,[1] the term real economy is used by analysts[2][3] as well as politicians[4] to denote the part of the economy that is concerned with actually producing goods and services,[5] as ostensibly contrasted with the paper economy, or the financial side of the economy,[6] which is concerned with buying and selling on the financial markets.’ “

  • GiorgioOrwell2nd

    Please ask the guests the following, if the stock markets recent highs are based on increasing corporate profits and revenues in markets outside of the US, why is it that any time there has been a hint that the Fed might pull back, the markets have reacted strongly downwards?

  • chrisnfolsom

    Do we ever learn our lesson? We have business leaders who are willing to bet our economy on their financial experiments where they make their profit upfront and leave us with the bill – essentially the same people who got us in the recession are at the helm again….and yet we expect something different – especially with the trend that money is has been going to the top – nothing I have seen shows any reversal in this trend.

  • Noman Mirza

    Economic development and inequality are not related.

    Re-election of our President certainly had a positive affect on my sentiments.

  • Fay Nissenbaum

    No one is mentioning last month’s analysis in the Sacramento Bee by tax critic David Cay Johnston. In part, he states that, “American companies hold $3.4 trillion in cash and near cash offshore, my analysis of official tax data shows. More than half of that money has never been taxed, the data indicate, or has been very lightly taxed, often at rates of 2 percent or less.”

    “The reason you did not enjoy these tax savings is because of lax rules enacted by Congress and allowed under California law. There are differences between state and federal law, but state rules allow for the use of many offshore tax haven strategies.

    Just how much state lawmakers across America shift the burden of supporting government off the wealthiest individuals and largest multinational corporations and down the income ladder is the focus of a pioneering analysis by the U.S. Public Interest Research Group Education Fund.

    It estimated that tax havens cost the 50 state governments $39.8 billion in 2011. That’s enough money to pay for all state and local costs of firefighting or the cost of parks and recreation.”

    SO why no heavy commentary this morning on how corporate profits are up because of rules that encourage the hiding of profits, a wonderfully magical tax trick we citizens cannot enjoy? As our parks are closed because “there’s no money”, why isn’t this prime time – when the profits are up – to insist on uncloaking the hidden tax havens?

    LINK to story:

    http://www.sacbee.com/2013/02/17/5194645/tax-havens-let-billions-vanish.html

  • GiorgioOrwell2nd

    Can you please stop doing these shows on the “economy” if you are not going to have guests alongside that challenge the status quo nonsense coming out of your typical guests? You have had the challenging type of guest before, but you never put them on side by side. The collection of opinions coming from these guests about what the stock market represents sounded like embarrassed and slightly clueless propoganda

  • Jen, San Jose

    This may be an aside, but many times I have heard Bay Area business people discuss our economic climate on The Forum, and H1B visas seem to come up as an answer to our woes. I am getting bored of hearing about a lack of tech oriented people in the US. There are a lot os skilled people in the US already- problem for the Bay Area is the quality of life for the money is so bad, it seems only folks from other countries will put up with it. (We were recruited here 2 years ago & are planning to leave this year- there are jobs elsewhere in Tech). It would be GREAT to hear a series on what the bay Area is doing to attract people from the US and improve quality of life (schools, traffic, housing, etc )

  • ed from SF

    Not many unemployed can afford a new car, let alone a mortgage. For instance.

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