What Saved the Dow? Sensible Economic Policies

As of the closing bell on Tuesday, the Dow was trading at 14,254—well above the previous all-time peak of 14,198, which the market reached on October 11, 2007. With investors increasingly optimistic about the economy, nearly four hundred issues on the New York Stock Exchange hit new highs. Sticklers will point out that, after accounting for inflation, stock prices are still more than ten per cent below their previous peak, but that’s quibbling. Any way you look at it, during the past four years the market has made a remarkable recovery from the post-Lehman crash.

One way to gauge this turnaround is to take a quick historical quiz. How long do you think it took the market to regain its high after the stock-market crash of 1929? Five years? Ten years? Fifteen years? Twenty years? Keep going. On September 3, 1929, the Dow closed at 381.17, a level it didn’t see again until November 23, 1954. That’s twenty-five years, two months, and twenty days—more than a quarter of a century. The stock market’s recuperation from the Great Depression took almost five times as long as its recovery from the Great Recession.

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