The American economy is a wonderful engine of prosperity left to its own devices, and on Tuesday it proved this again with another surge in equity prices that pushed the Dow Jones Industrial Average above 30,000 for the first time. Stock prices rise and fall, but this symbolic milestone of optimism for the future shows the economy’s resilience despite the COVID-19 plague.

We’ve lost track of the many doom and gloom predictions, especially since politicians shut down the economy in March.

Remember the disaster that was supposed to follow the end of enhanced federal jobless benefits on July 31? Didn’t happen. Third quarter growth was 33.1%.

Then recall the catastrophe if Congress didn’t pass another $3 trillion spending bill? Chuck Schumer and Nancy Pelosi issued almost daily press releases, echoed by the sages at Bloomberg. Didn’t happen. Then last week we were told that if the Treasury ended the Federal Reserve’s special pandemic facilities, the markets would reel. Some reeling.

Instead the economy keeps growing, and the jobless rate keeps falling, despite the surge in new COVID-19 infections. The Atlanta Fed is estimating growth in the fourth quarter, which is halfway over, at 5.6%. That could certainly change if more governors follow California’s Gavin Newsom in punishing his state’s citizens with lockdowns. That’s one reason California’s jobless rate was fifth highest among the 50 states in October at 9.3%. New York was third highest at 9.6%.

Meantime, overall U.S. growth continues to surprise for the better. The housing market is booming, and consumer and small-business confidence are strong. The unemployment rate is down to 6.9%, and continuing jobless claims fell another 429,000 in last week’s report. Americans have enormous savings they can deploy, which explains why consumers keep spending despite the pandemic.

Auto sales have been strong, no doubt in part because people are flying less and aren’t taking the usual vacations.

Investors are looking at the medical miracles of COVID-19 vaccines that portend the end of the pandemic in 2021. The fading chance of post-election political trauma helps, but the bigger boost to the market has come from the prospect of a Republican Senate acting as a check on Joe Biden’s destructive tax increases. He can still do damage with regulation, but that takes more time and is subject to legal challenge. The two Georgia runoffs on Jan. 5 producing a Democratic Senate are, apart from shutdowns, the biggest market risk ahead.

By the way, on Election Day in 2016 the Dow closed at 18,332.

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(4) comments

NJ

And from The Real Street Journal, 12.6 Million Americans are jobless and 30 Million Americans don't have enough food to eat. But hey, the 14%'s portfolios are looking better. Banner day in America, eh?

CitizenJoe

"Let them eat cake."

That will work out well.

mworden

The Wall Street Journal used to be a respectable source of economic and business news. It is currently owned by Rupert Murdoch's News Corp, which also owns and operates Fox News. So use your best judgment on its biases and slants.

It seemed to me that the stock market rose to record highs upon the news that the official transition to a Biden presidency was beginning.

At the end, the editorial mentions the stock market level when Trump took office. I suppose the reader is supposed to make some sort of automatic assumption that Trump has done a great job. Trump was inaugurated into a thriving economy.

When Obama was inaugurated the economy had collapsed and we were facing a Great Recession, tottering on the edge of a great depression. The stock market was at 7949. Trump's economy has not matched the growth that took place during the Obama presidency. And that's something you are unlikely to ever hear from any of Rupert Murdoch's News Corp media outlets.

Citizen495

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