Semi-Daily Journal Archive

The Blogspot archive of the weblog of J. Bradford DeLong, Professor of Economics and Chair of the PEIS major at U.C. Berkeley, a Research Associate of the National Bureau of Economic Research, and former Deputy Assistant Secretary of the U.S. Treasury.

Saturday, October 28, 2006

Daniel Gross on Dow 12000

Mark Thoma watches as journamalism in the interest of reprinting Republican talking points drives Daniel Gross into shrill unholy madness:

Economist's View: The Real Dow 12,000 Story: Daniel Gross on a new Republican talking point, "Dow 12,000":

How Now, Grown Dow?.... The Dow Jones industrial average first closed above 12,000 on Oct. 19, and has remained above that lofty benchmark ever since.... Dow 12,000 quickly became a Republican talking point.... So far, Republican candidates don't seem to be benefiting from the Dow record, which is less surprising than it seems. For starters, the Dow's success does not mean that stock-market investors in general are thriving, because the Dow... as an overall stock-market proxy and investment tool, it's an also-ran.... The S&P 500... is a much more accurate gauge.... [T]he claim that "the stock market" is at an all-time high simply doesn't match most investors' experiences.... 12,000 doesn't really even represent a record high for the Dow.... In real terms, the Dow is still nowhere near the peak it hit several years ago....

[S]ome of those who are trumpeting the high nominal value of the stock market are urging people to focus on the real, inflation-adjusted value of another asset that has been at record highs recently. Take a gander at George Will's absurd column last week.... Will celebrates the record nominal high in stock prices but urges readers to focus on the real price of oil. By mixing and matching real and nominal, Will could just as easily have argued that oil is more expensive than it has ever been, while the Dow is barely at the level it reached in 1999. If Democrats controlled the levers of power, he'd be making precisely that argument...

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