Recesssions in history

[neil0311]

Originally Posted by Chango

It's funny how the argument over whether the recession is getting better or worse on this forum seems to directly parallel the DOW. If the Dow is up, the optimists rule the board, if it's down, the doomers have the floor.

Is it just me or does anyone else notice this?


But the problem with that is the DOW is a crappy indicator of the state of things.

I haven't noticed that, but it could be. The Dow is NOT a "crappy indicator of the state of things" and in fact it is one of the more reliable leading indicators of where the economy is going in 6 to 9 months from now. The Dow is also an indicator of personal wealth, since most people have personal investments in stocks and 401K funds. When people see their investments rising in value they feel better and are more likely to spend.

The problem we seem to have on this board are people without much historical context, who see this downturn in a vacuum, and who are stuck on lagging indicators like employment. "OMG....unemployment is so high...how will we ever recover" seems to be the post I see often. There is little thought that this has been the case through most recessions, and that most people are still working but just not spending as much.

[debtmonger]

After going through The Great Depression and World War II, the short mild recession of 1945 was just a blip on the radar.

There is no doubt that the 24/7 media barrage does have an affect on our perceptions. It is kind of hard to get away from all the bad news. I've looked through old newspapers on microfilm during the high point of the depression and its hard to find evidence of the tough economic times. It's there if you look long enough, but they didn't beat you over the head with it. In the end, in good time or bad, life goes on...

[Traderx]

Originally Posted by neil0311

The Dow is NOT a "crappy indicator of the state of things" and in fact it is one of the more reliable leading indicators of where the economy is going in 6 to 9 months from now.

False.The DOW and other index's like the SPX are horrible indicators of anything other than current sentiment.

Example, the DOW made an all-time high in Oct 2007. Where was the economy 6-9 later? In recession. In fact, most would agree the recession started a mere 3 months later.

I rest my case.