Dow hits 10,000, unemployment nears 10 percent

For the first time in over a year, the Dow Jones Industrial Index briefly hit 10,000. While much of the economy is still languishing -- for one, unemployment hit 9.8 percent earlier this month -- the Dow has risen roughly 50 percent since March.

Whether the Dow breaking the 10,000 barrier is a good indicator of the larger economy -- or just Wall Street's recent turnaround -- is a matter for debate. Judging by the stock market alone, the economy seems to be inching its way toward a recovery.

The Huffington Post spoke to David Denslow Jr., Research Economist for the Bureau of Economic and Business Research, about the Dow's recent resurgence and its relation to employment levels. Denslow pointed out that the stock market is typically a leading indicator of the larger economy. In this case, Denslow said, the disparity between unemployment and the stock market's performance seems to be more pronounced.

"It takes quite a while," Denslow said, "before employers start hiring again because they're sufficiently convinced that times are going to get good. In this case in particular, according to the conventional wisdom at least, most forecasts expect quite a lag before the unemployment rate comes down, with the consensus forecast being that it's going to peak sometime in early 2010."

Denslow, for his part, said he was optimistic that the Dow would continue to rise modestly, but cautioned against any Dow 10k fervor for average investors: "GDP probably has turned around, the stock market has come back. Those are good signs, but they're not all that pleasing when you don't have a job. My hypothesis is that we can't really tell which way [the market] is going to go."

Dow hits 10,000, unemployment nears 10 percent - Huffington Post - October 14, 2009