Some comforting history

Published 8:29 am Friday, February 27, 2009

These are difficult economic times, without question, and our community is not exempt from the global recession, evidenced by the headlines on today’s front page.

But are things as bad as they seem?

The Dow Jones Industrial Average is one of the most referenced stock market indicators and is often quoted as if it is the most important economic indicator nationwide. National news anchors report it as if it is the daily “score” of whether the economy is winning or losing. Obviously, that is incorrect, but here are some facts to consider for those who put a lot of “stock” in the Dow.

The Dow is at 7,182 as this editorial is written. In August 1982, a recessionary period, it dipped as low as 769. It hovered near 1,000 most of decade of the 1980s but climbed above 2,000 in the final two years. It made a consistent run from about 1993 until 2001 — from 3,700 to above 10,000. The year 2001 would be about the time the telecom and dot-com “bubbles” burst. As the market pulled back, the Dow dipped to 7,101 in October 2002, lower than it is today.

It did not truly begin to rebound until spring 2003, then made a steady run, except for a few fraud-related (Enron, etc.) hiccups, to 14,121 by July 2007. We all know the rocky road we’ve traveled since.

Some thoughts for perspective:

■ Despite a Dow low of 769 in 1982, we came out of that recession just fine and experienced a long period of economic stability and then growth and expansion.

■ Many Americans have lived their entire lives during a time of stability or steady growth of the stock market. So our perspective and expectations are based on that experience. Ditto for many of the reporters, anchors and analysts we see in prime time nightly.

■ With the exception of 2002, what we are experiencing in the market today is quite different than the routine we have all known, but the numbers clearly show it is not the end of the world.

We are a resilient country and economy, and we will rebound as we always have.