Maybe, I dunno, we should stop using the Dow as a measure of the economy

[ck4829]

Say you have a thermometer, you have it outside, and it...
* Shows a temperature that is 70-80 degrees (Fahrenheit for future reference) and there is snow outside and frost on the ground
* Varies wildly, you look at it and it changes a whole 15 degrees every time you look at it
* Shows this pleasant temperature of the mid-70s, but you are freezing cold or about to have a heat stroke
* Is somehow manipulated to show a pleasant temperature

Then there is something wrong with the thermometer or there is something wrong with your ability to read the thermometer or make an informal/unofficial/perception-based gauge of the temperature outside and compare it to the thermometer.

You would say this. You would call it out.

So why then, do we allow this for the Dow as a barometer of the economy?

Compare and contrast:
* The Dow is doing X despite Y and compare that with other records
* "Oh, the market is just being volatile"
* "The markets can be manipulated"

And you know, my problem isn't with the markets or the DJIA, it's with us... Why are we not able to say "Get your act together or we will no longer use you as a barometer of the economy"?

[DarthDem]

1. Very good question

I don't get it either.

[Sherman A1]

2. We should drop the DJI as a barometer and should have done so long ago

I believe that Andrew Yang was and is absolutely correct on this topic, with his goal of Human Centered Capitalism. We need to measure how well people are doing, not the stock market.

[rampartc]

3. many people do have some investment in the stock market

through their 401k or maybe a mutual fund.

it is nice when the dow is up and my statements show that I have money.

but, I agree with you that it is really meaningless. the "value" of this paper can be manipulated by a few big players, who profit no matter what the market is doing."

"bulls make money, bears make money, pigs are slaughtered." jay gould

[whathehell]

4. +1,000. n/t

[Voltaire2]

5. It is a pretty good predictor of where the

economy is headed.

[safeinOhio]

7. Still part of Wall Street, but the S&P

is a better indication of the broader stock market.

[IronLionZion]

8. The DJIA is only 30 large US companies

and is maybe not even the tip of the iceberg. There are thousands of other companies.

To measure the economy, we need to also look at household debt and incomes, employment, consumer prices, and much more. I just read an article saying that Americans have record debt from the record low interest rates which makes it harder to weather through the next recession.

Millions of lower income and lower middle class Americans have been left out of the stock market gains over the past years. They would also have less savings to live on if job losses come next.

[bucolic_frolic]

9. Drop it and lose 100 years of statistical behavior

that most investors rely on to some degree or another.

[Sloumeau]

10. The key is not to look at the DJIA alone.

If one looks at the stock market with other indices as well, the Dow can be useful. However, one needs a lot more than stock indices to understand the health of either the market or the overall economy. The article below on 10 ecoonomic indicators shows one how to get a better overall idea of the economy:

[link:https://www.aaii.com/investing-basics/article/the-top-10-economic-indicators-what-to-watch-and-why|]

[rickyhall]

11. Like running the economy based on a video game with millions of targets.

[panader0]

12. 90% of stock is owned by the upper 10% of the people,

so yeah, just because the market had great gains (until recently)
does not mean jack to most people. Only one guy I know owns
stocks. Some may have some in their IRAs, but here on the lower
end, no one has IRAs either. Most of just eke it out.
Being poor has one benefit--not far to fall.

[IronLionZion]

13. People might be open to a little socialism this year

[panader0]

14. Eat the rich, they have better marbling.

The meat of the poor is tough and stringy.

[deminks]

15. Maybe, I dunno, stop tying all of our pensions up in something so volatile.

A lot of us are getting ready to retire and can't wait 10 years for another upswing.

What did I hear this morning? "You can make money in bad times, too. " Only if you are playing with my retirement.

/rant off.

[Progressive dog]

16. Ptedicting the future is always hard

whether it's weather or economies. The Dow Jones average is not a government measure and no economist is forced to use it for economic predictions. They do so because it is one of the many variables that do predict where the economy is going and in the case of the stock market averages that help push the economy in the direction predicted.

[LanternWaste]

17. It's a leading indicator (among many). Not THE measure or default standard.

It gets airtime 'cause it's sexier than CPI, M2 and a host of others benign sounding measures.

[Danascot]

18. Cost of Thriving Index

This Cost of Thriving Index isn't anything like the S&P or DJI as it isn't up to the minute or even daily but I thought it was interesting. It's claimed to be "the best explanation of middle-class finances you will ever see". The most recent information is for 2018 and it isn't good news.

“In 1985, the typical male worker could cover a family of four’s major expenditures (housing, health care, transportation, education) on 30 weeks of salary,” he wrote on Twitter last week. “By 2018 it took 53 weeks. Which is a problem, there being 52 weeks in a year.”

Apologies that it's behind the Washington Post paywall but if you have access the link is:

https://www.washingtonpost.com/business/2020/02/24/this-chart-is-best-explanation-middle-class-finances-you-will-ever-see/

[Hoyt]

19. It is but one measure, as is Consumer Confidence which has been high, employment, wage growth,

GDP, etc.

But, agree there should be some other widely published measures that capture how the average Jane is doing.