Our current stock market bubble is sort of scary.
Articles trying to assess the impact of the six-month-long string of political crises plaguing us under President Trump have included reports of the ongoing surge in the U.S. stock market. The Dow Jones industrial average closed above 22,000 yesterday — a record high and yet another landmark in one of the longest bull markets in history. Some of these articles have cited it as evidence that President Trump’s tenure has been good, or at least that it’s not been bad. Indeed, Trump yesterday took credit for the boom.
The problem, however, is that it looks like a massive bubble inflated by unknown factors. In 2009, the Dow was around 7,000 — one-third of today’s level — and it’s risen 23 percent just since Trump’s inauguration, based on his many promises of reduced regulation and other business-friendly policies. The weakening dollar appears to be a factor. Corporate profits are up, and the rich continue getting richer and more eager to buy stocks, but the economic fundamentals just don’t explain the bubble.
Another bursting bubble could make the political chaos we’ve been experiencing look like a party.