Bernanke, Obama and the Economy
Nov 17, 2009
Posted by Jody Eisenman | Filed under Uncategorized
Yesterday, Ben Bernanke, the head of the Federal Reserve, gave a speech in New York. His central themes were that although the economy was improving, we are still losing jobs, albeit “more slowly”. He also stated that he believed interest rates will remain low for an extended period of time. Despite the job losses (and perhaps because of low interest rates), the stock market continued on its’ dizzying rise to new heights. Yesterday, the Dow rose another 136 points to close at a new yearly high of 10,407. Since the March lows, every selloff in stocks has been met with a virtual deluge of new buying. Of course, there are still many “doom and gloom” analysts who either think the market is well ahead of itself, or are even calling for a new steep decline. Anecdotal evidence seems to indicate that the average individual investor has only participated in this rally if they didn’t sell last year. Otherwise, based on mutual fund inflows and outflows, it seems that most people view this rally with a very healthy degree of skepticism. Meanwhile, the Dow Jones is now up almost 4000 points off the lows in March.
What I find fascinating is the support Obama has considering the state of the job market. One of the major beneficiaries of this rally has been Wall Street. Despite this, Wall Street tends to be Republican, and most people here would probably vote against Obama if he ran for office today. On the other hand, the unemployment rate among the under-24 year old workers is now about 19%, and the rate among African Americans in the same category is about 30% (as quoted by Bernanke). Yet, paradoxically, these groups tend to be among the strongest supporters for Obama! Truly fascinating.
