DOW All-Time High: How is This Time Different?
Time to dust off your rally caps, again. After more than five years of waiting, the Dow Jones Industrial Average has finally managed to break its all-time nominal high set in October 2007. The move looks good on paper, but the economy is quite different from the previous record.
On Tuesday, the blue-chip index opened above its previous record closing high of 14,164, and even broke through the all-time intra-day high of 14,198 in morning trading. It took the Dow almost 65 months to make the new highs, a sharper rise than the 81 months it took to recover the losses seen after the dot-com bust.
The move provides hope that the lost decade for stocks is finally over. Bulls claim the recovery is slowly improving, as corporate profits also reach new highs. The New York Times recently reported that corporate profits accounted for 14.2 percent of national income in the third-quarter of 2012, the largest share in over 60 years.
However, the Federal Reserve and its historic monetary easing programs continue to provide a floor to stand on for Mr. Market. Here’s a look at how the economy is different today than it was in October 2007…