Bull Market Can Still Stumble Over Jobs
SCOTT SIMON, host:
This is WEEKEND EDITION from NPR News. I'm Scott Simon.
This past week the Dow Jones Industrial Average fought its way back to close above 10,000 - again, a 53 percent gain in just seven months. So does this mean that the economy's finally getting its groove back? NPR's Chris Arnold reports.
CHRIS ARNOLD: There's a definite glass-half-full or half-empty element to the Dow hovering around 10,000 again. It is way up off the bottom, but it's still flat compared to where it was a decade ago - the first time the Dow crossed 10,000.
Ms. JULI NIEMANN (Stock Analyst): Well, I tossed up a piece of confetti. Actually, this is the 26th time we've crossed this so-called milestone here.
ARNOLD: Juli Niemann is a stock analyst with Smith, Moore and Company in St. Louis, Missouri. Safe to say, she's underwhelmed about the Dow's return to 10,000.
Ms. NIEMANN: It's kind of like a cruise ship crossing the equator. You know, you got back and forth and back and forth, and the guys are decking out their Dow 10,000 ball caps again. We're going to revisit this a number of times, because it still isn't over.
ARNOLD: Niemann says the economy has avoided complete Armageddon and things are stabilizing, so that's why the market's come up. And she says investors are now piling into stocks because they don't want to miss the rebound. But longer term, Niemann says the road to recovery is not going to be fun.
Ms. NIEMANN: It's going to be like walking through mud. In other words, you're not drowning, it's not quicksand, it is mud, but we simply can't make any kind of progress here.
ARNOLD: Niemann actually predicts that the economy is still so out of whack, companies and individuals have so over-borrowed that the stock market is going to basically stay flat for another 10 years. So that does not sound very encouraging.
Mr. NARIMAN BEHRAVESH (IHS Global Insight): I'm more optimistic about the course of the U.S. economy and about the stock market. This isn't fluff.
ARNOLD: Nariman Behravesh is chief economist of IHS Global Insight.
Mr. BEHRAVESH: For businesses, the confidence that comes about when their stock prices increase is important and it's one of the factors that's going to determine how soon they start to rehire.
ARNOLD: And that's, of course, important in terms of getting the unemployment rate back down and getting the economy's momentum moving in the right direction.
So there's the rising stock market, also profits are improving at many kinds of companies. The U.S. is exporting more products, and all that has Behravesh thinking...
Mr. BEHRAVESH: Not only is the recession over, but it sure looks like the recovery has begun, and begun in earnest.
ARNOLD: It might not be a strong recovery. Even Behravesh says that unemployment will remain stubbornly high - around seven percent - even five years from now. But...
Mr. BEHRAVESH: The message is: it's getting better, hang in there.
ARNOLD: Chris Arnold, NPR News.
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