Chart of the week: Running of the Bulls

I’m an engineer. I love data, and I love charts. So once a week I’m going to show you a chart that I think is relevant in the world of politics. Then you can read the explanation and use it to win arguments with your friends. Sound like a plan?

Okay! So this week’s chart is one that you might recognize if you’re familiar with the stock market. It’s simply a chart of the value of the Dow Jones Industrial Index, one of the most widely cited portends of economic doom or boom. It tracks only 30 “blue chip” stocks, but it’s a fairly good gauge of the health of the stock market as a whole, which in turn is a reflection of the global economy.

Chart of the week DJIA

“I said bull-ISH, not… ” (Source: Google Finance)

If you look at the chart you’ll notice that the Dow has just broken above 15,000 for the first time in its history. You’ll also see that the steep decline from the recession years is totally erased. Both of these are good signs – or, in stock market terms, these are “bullish” signals.

Why should you care? This has obvious significance for those of us who trade stocks, but I understand most of you don’t do that. For those out of the market, the real take-away here is that the economy is improving. The stock market is a leading indicator, which means that it improves before other macroeconomic measurements like the unemployment rate. A growing stock market lets us predict a growing job market in the near future.

So while you might occasionally hear bad news about the economy and how hard it is to get a job, take comfort in the fact that it is getting better. Slowly.

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Posted in Fiscal Policy
One comment on “Chart of the week: Running of the Bulls
  1. slowly is the operative word

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