Nothing Lasts Forever

Editorial


Nothing Lasts Forever
A statue of George Washington looks over the New York Exchange (NYSE) building on Wall Street. (Maurizio De Mattei / Shutterstock.com)

A 550-point drop in the Dow Jones Industrial Average last Tuesday completely wiped out all gains the venerable stock index had made in 2018. It looks like the “Trump bump” in 2017, when the DJIA increased by 25 percent, may have to suffice for two years — and it’s not a bad return even then.

It’s important to remember that “the stock market” and “the economy” are not synonymous. Only about half of Americans have any exposure to equity investments, and most of the half that does are small investors just hoping to retire someday. But they are plenty exposed to other economic indicators — the unemployment rate (historically low), interest rates (low but rising), energy prices (falling but vulnerable), inflation (controlled, except in health care and higher education).

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The ultimate economic indicator, of course, is gross domestic product. And growth in that indicator slowed from 4.2 percent in the second quarter to a still-brisk 3.5 percent in the third quarter (an “advance” estimate from the Bureau of Economic Analysis, which may change when an updated figure is announced Wednesday).

How long will GDP continue growing? Great question. One thing to keep in mind: If a recession holds off another six months, the current expansion will be the longest economic expansion since the Great Depression. And that’s sort of like being the oldest living person.

As Steve Anthony, president of Anthony Timberlands of Bearden, said late last month, in an interview for a story in this issue: “We’ve had the longest period of good markets that I’ve seen in my lifetime, which makes you a little bit nervous, especially given the fact that lumber prices absolutely crashed about six or eight weeks ago. We tend to be a leading economic indicator, and I hate to think that that’s a signal of what we’re getting ready to see in 2019.”