BC Expert: The Dow at 17,000
Murray and Monti Professor of Economics Peter Ireland
Peter Ireland’s areas of research interest are macroeconomics and monetary economics, both nationally and worldwide. Widely published in financial and economic journals, Ireland is a research associate with the National Bureau of Economic Research, a member of the Shadow Open Market Committee, and part of the Federal Reserve Bank of Boston’s Research Department Academic Advisory Panel.
On the heels of another positive jobs report, the stock market followed suit as the Dow Jones Industrial Average, after flirting with the 17,000 mark for the past few days, finally broke the elusive barrier, ending an abbreviated trading day at 17,068.
“Economic theory isn’t going to say that there’s anything magical about 17,000 relative to 17,100 or 16,900 - it just doesn’t matter,” says Boston College Murray and Monti Professor of Economics Peter Ireland, Ph.D. “But I think the symbolism is there. The number indicates that finally, after several years of modest but disappointing growth, the American economy turned the corner here.”
The Dow’s surge into uncharted territory marks the first time it has cracked the 17,000 mark in its 118-year history. The record-breaking number comes on a day when the U.S. Labor Department announced the economy added 288,000 jobs. Ireland says the 17,000 milestone is further proof of a bullish market.
“Relative to the current level of corporate earnings, stocks seems to be pretty fairly valued, but I think share prices are going to be moving higher over the next couple of years, driven by growth in profits,” says Ireland, a research associate with the National Bureau of Economic Research. “It’s going to be a return to a return to prosperity for the American economy.”
Ireland sees parallels to the strong market of the late 1990s and what we’re seeing today.
“If you remember the Dow in the 1990s, people’s expectations had gotten so blown up on the upside that they were bound to be disappointed,” says Ireland, a member of the Shadow Open Market Committee and Federal Reserve Bank of Boston’s Research Department Academic Advisory Panel. “I think everybody has been worn so far down by all the bad news for the past six years, they’re sort of making the opposite mistake. Just like things were never as good as they seemed in the late 1990s, now things aren’t nearly as bad as people think.”
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