Dow 18,000

I have to admit that I don’t follow the Dow much these days, at least not like I used to. But in any event, the Dow broke though 18,000 for the first time in history today. The Dow first broke 180 on July 27, 1927, and it hit 1,800 on March 20, 1986. But lately, the Dow’s been a laggard. If the Dow had merely kept pace with the S&P 500 over the last six years, it would be over 20,300 today. But, due to its age, the Dow gets a lot of attention. So congratulations, Dow!

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The best news this morning was the strong upward revision to Q3 GDP. The government now says that the economy grew in real terms at a 5% annualized rate in the third quarter of this year. Bear in mind that Q3 began six months ago and ended three months ago. Still, that’s the best quarterly performance for the economy in eleven years.

A lot of people got rattled when Q1 was negative but now that Q2 and Q3 were pretty good, we can see that it was a weather-related outlier. The government also released spending and income data for November. The key number is PCE which is personal consumption expenditures. That rose by 0.6% last month. That probably means that Q4 GDP will be good as well.

On the downside, this morning’s Durable Goods report fell by 0.7%. That was far worse than expectations. Economists were expecting a 3% gain. That may suggest that consumers are leading the economy now, not businesses. We’ll need to see more data before we can say for certain.

Posted by on December 23rd, 2014 at 11:16 am


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