Econ 101: A Quick Post For The Austerity Crowd

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Well this certainly doesn’t jibe with what the we-have-to-stop-spending-or-we’ll-kill-the-market crowd keeps telling me.

The Dow Jones Industrial Average closed at 10,428 Monday, finally breaking back into positive territory for the year. At its low on 7/2, the market was down 7.1% but is now up 0.9% YTD. Since 1962, there have only been ten years where the DJIA has been down more than 5% at its low and has recovered to cross back into the black for the year.

DJIA Recovers After Being Down 5%
DJIA Recovers Performance Table
On average, after the market turns positive it has continued higher by 7.7% to year end and has been positive seven out of ten times.

Now, maybe I am crazy, but could it be that economists have been right all along and, perhaps, that they know a little more about what works than do politicians (of either party) who are more concerned with their own political gain than with the long-term health of the economy?