Markets slipped at the end of last week, leaving much anxiety in the economy as we headed into the holiday weekend. Each of the major American indices suffered roughly the same drop, falling nearly half a percent at the closing bell. The Dow Jones (46.05 points) and S&P 500 (4.79 points) each dropped 0.47 percent. The NASDAQ dropped 0.46 percent (9.57 points).
Luckily for investors, the holiday layoff seems to have been just what was needed to encourage a nice rally Tuesday morning. The Dow Jones roared through the first hour, pushing up 164 points. The NASDAQ and S&P 500 reacted with even more vigor.
According to Bloomberg News, much of today’s rally is a response to strong European financial data. Oil futures are on the rise, European bond markets are yielding nicely, and the Japanese yen fell – signaling what most expect to be a rise in Japanese exports productivity.
These financial movements have little effect on most Americans in everyday life, but they also seem to be the only indicators watched by our economic brain trust in Washington.
In other areas, the economy is simply falling further behind or dragging itself slowly forward.
According to MarketWatch, Richard Fisher of the Federal Reserve Bank of Dallas sees the American economy decelerating in the coming months. The economy is not expected to formally stagnate and “depress” in the next fiscal quarter, but whatever growth we see will be far less than it should be.
Typically the powers that be are happy with any signs of growth, but to recover from the 2007-2009 downturn America needs robust growth. We cannot continue to happily survive with 2 or 3 percent annualize–growth as we did during the Bush administration. Making up for our lost decade will require two to three times that much upward momentum.
Another unfortunate indicator for our economic outlook is the growing latent pessimism in the job market.
After successfully cutting jobless benefits for more than 1 million Americans, the Republican party has been quick to point out that the Democrats are not salvaging the economy for the American workers. What they fail to mention is that the Democrats have been ineffective largely because of Republican sabotage.
The American people are suffering and the two political parties are using it as an excuse to attack one another in their never-ending power plays. If our country can ever hope to truly recover it will need both parties to make a 180 degree shift in their approach to mainstream politics.