Essay on Stock Project

The United States’ economy has been in a slow, uneasy recovery since a late 2000s recession. Between October 4th and November 7th, the Dow Jones Industrial Average, the S&P 500, and the NASDAQ, as well as the unemployment rate and the Consumer Price Index reflected this slow and uneasy recovery with mixed and mediocre performances. The trend lines for the Dow, S&P 500, and NASDAQ look similar for the period of stock ownership. They all declined slightly, with their lowest point being in mid-November. The Dow fell by 565.83 points, from 13575.36 to 13009.53. The S&P 500 fell from 1461.40 to 1409.15, while the NASDAQ fell from 3149.46 to 2966.85. Despite this, all three have recovered to the point that they are now higher than just before they bottomed out in 2009. The rise out of the near catastrophe in 2009 to their current mediocre-but-steady numbers is indicative of the slow economic recovery. During the period of stock ownership, President Barack Obama was reelected for a second term, on 6 November. On November 7th, the S&P 500 and the NASDAQ fell 2.4%, and the Dow fell below 13000 points for the first time since early August. Investors had preferred opposing candidate Mitt Romney, believing he would take a softer stance on business practices, as well as a more hands-off approach to the economy. They lacked confidence in the Obama administration’s economic policies. A problem that plagued President Obama for most of his first term is my second chosen indicator: the unemployment rate. The unemployment rate fell from 7.9% in October to 7.8% in November, with 146,000 jobs being created. The number of unemployed fell from 12.3 million to 12 million. Jobs were gained in the retail and healthcare industries, but losses were had in the construction industry, which makes sense because there is less construction in a struggling economy - people do not invest in new projects and real estate is cheap. Though a 0.1% gain in the unemployment rate seems rather trivial, it is really a good sign in the perspective of the last few years; unemployment was at 10% in October of 2009. Hopefully, this percentage will continue to decrease in the coming months and years. The Consumer Price Index is a monthly measure of the change in prices consumers pay for goods and services. The percent change in the CPI from year to year is the measure of inflation. In November, the index for urban consumers fell 0.3 percent, meaning those consumers paid less for goods and services on average. The report stated that the gasoline and energy indexes fell, while the food index rose. While Hurricane Sandy had bumped some gas prices up in the Northeast, countrywide prices fell in November according to consumerreports.org. Americans spent more on food at home and at restaurants in November, but spent less on apparel. Low gas prices puts more money in the pockets of the average American, which benefits the economy because they can go invest it, or go out to eat and help that section of the economy. There were a couple of odd circumstances during the period studied besides Barack Obama’s reelection. The aforementioned Hurricane Sandy made landfall in the northeast and shut down the stock market for two days, but the main indices showed that it had very little effect on the economy. According to Goldman Sachs, the storm might actually help the economy by giving an employment boost to the construction and industrial sectors, which are responsible for rebuilding damaged structures. There was also the dreaded “fiscal cliff,” a package of spending cuts and tax increases that would have gone into effect had Congress not reached an “11th hour” deal to avert the crisis. Last minute partisan politics do create economic uncertainty; businesses will be hesitant to invest and hire new workers if there is a chance their taxes will increase. The agreement avoided an imminent recession, and there was no measurable effect on the economy.

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