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Dow Hits Record High, But Housing Foreclosures Rise

The Dow Jones Industrial Average topped a record 14,000 this week, but other concerns about the economy remained, including an increase in housing foreclosures. A columnist explains the economic factors.

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    Hi, we're back. I'm joined by David Leonhardt, an economics columnist for the New York Times. David, are you with us?

  • DAVID LEONHARDT, Economics Columnist, New York Times:

    I think I am this time, aren't I?


    OK, great. We've had some mixed numbers in the past week. How do they square with a stock market that's risen so strong, so fast?


    The stock market really has risen strongly in the last few years, but the problem with all this talk about record-high stock markets is that the stock market isn't really, in a real sense, at a record high. The main reasons the Dow Jones Industrial Average and the Standard and Poor have reached these so-called records is inflation.

    And every year, the government prints more money, and so every year the price of cars and bread and stocks go up. And that's really the only reason that we have the stock market now at a record. If you look at it in inflation-adjusted terms, the Standard and Poor 500 index, which is a much better measure than the Dow of what the market's doing, is still about 18 percent or so off of its real high from the year 2000.

    And even when you include things like dividends, it's 8 percent or 9 percent lower than it was in early 2000. So there's really no meaningful way in which the stock market is at a record high, although it's had a good few years.