The Dow Jones closed at an all-time high on Tuesday, pushing past the 18,000 mark for the first time in history and closing at 18,024.17. Many are saying that the market delivered an early Christmas present as it sailed past the 18,000 milestone within moments of the opening bell. This is especially exciting considering that it only reached the 17,000 mark for the first time just a few months ago in July of this year.
This record breaking achievement is being attributed to the news that the US economy experienced an amazing 5% growth in the third quarter of 2014 alone, making it the strongest quarter in over a decade.
With regard to this huge economic growth, Morningstar economist Bob Johnson explained that while the Dow Jones Industrial Average hitting a record high of more than 18,000 points Tuesday is good news, he is far more thrilled at the increase in the GDP.
“That’s a huge number,” stated Johnson, “that’s the best in a decade, and so I think that’s what got people excited and pushed the Dow up to 18,000.”
Adding to the strong economic growth is consumer spending, which remains strong through this holiday season. Some reports have explained that rising wages that have been seen recently, combined with plummeting gas prices, are proving to be strong contributing factors for the overall success that our nation’s economy is currently experiencing.
Continued Housing Slump
Johnson did however share some concern with regard to the overall outlook of our economy. “While consumers are spending pretty good, it hasn’t yet turned up in better housing numbers or better business investment numbers, and I’m not really hopeful that turns up at all in 2015.”
But there are times you need to focus on the smaller victories rather than the overall war. The Dow Jones rising over 900 points in only five days is remarkable, and Johnson felt secure in predicting that if gas prices remain where they are or continue to drop, consumers will continue to spend their money and further boost the economy.
Yesterday’s market surge was led by energy stocks alongside a fairly significant jump in the price of oil. Not to be outdone, the S&P 500 also closed at a record high of 2082.17, marking the 51st such record breaking day in 2014 alone. While the Nasdaq did not break any records yesterday, it did still close at a solid 4765.43. All three are continuing to show strong gains, as the increase continues on today.
The steady growth shown by the stock market is a good indicator of how the 2015 year will start out. The US is also in the middle of the biggest employment gain since 1999. Combine that with the lowest fuel prices we have seen in years (which is in turn driving up auto sales), and you have a good indicator that this growth can be expected to continue well into 2015.
But the one area that has yet to show any significant or consistent recovery is the housing market. While the Mortgage Bankers Association reported that more Americans applied for mortgages last week and that refinancing activity is also steadily on the rise, many economists are cautioning against expecting to see record breaking figures in this industry any time in the near future.
“The economic recovery seems to be staying on track while gradually improving and increasing its rate of growth,” wrote David Kotok of Cumberland Advisors. A sentiment shared by many economic forecasters.
While 2015 is expected to be a good year with continued growth in our economy, it is still not expected to be the answer to all of our current financial woes. But in the meantime, I think it’s a good idea to sit back and enjoy the ride as much as possible.
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Jennifer Leonhardi was born and raised on Catalina Island, giving her a unique small town perspective and focus on community. With a degree in Sociology, she now primarily enjoys writing, largely based on her own experiences, on topics such as financial assistance programs, issues concerning the home and family, and socioeconomic trends.