The stock market reached record highs last week, but what does this mean for the average northwest Missourian?
The Dow Jones Industrial Average, a way to measure the stock market, passed 2,500 for the first time last Thursday. The S&P 500, another way to measure the stock market, is also having its greatest growth period since World World II.
This growth is credited to high consumer confidence.
“When you think about what actually determines growth in our economy, 70 percent of it is from people like you and I — consumers spending money — and when you feel confident about the future, you’re going to spend more money. And that’s going to cause the growth in the economy,” Jeannette Holland, Missouri Western State University professor of economics, said.
Although there will naturally be some down days, this growth is expected to continue through 2018.
“We see a strong business environment. Washington is very pro-business,” Charles Hinde, a certified financial planner at Heritage Investments, said. “If you couple both the consumer confidence of 2017 with the strong business environment in 2018, that’s why we are seeing a lot of high and strong numbers here in the overall economy.”
This strong stock market will benefit shareholders.
“Those who are invested, those who have a portfolio that is tailored to their needs, those who are maybe seeking the advice of others are going to see the benefit of this,” Hinde said.
However, for the average Missourian, the strong stock market means nothing.
“U.S. stock ownership rates are highly related to income, ranging from 21 percent among those with an annual household income of less than $30,000 to 89 percent among those with an income of $100,000 or more,” a recent Gallup survey found.
Some economists expect a trickle-down effect. This means that as the big corporations succeed, they will share their success with the employers. Wages will increase and the economy, overall, will improve.
Holland is skeptical. Productivity and the stock market have been increasing steadily since the housing market crash in 2008, but wages have stayed stagnant.
For those who are interested in investing in the stock market, Holland said it is not too late.
“I think it’s always a good time to invest. Analysts are pretty much in an agreement that we’ll continue to see gains at least through the next year,” Holland said.
For those who are already invested, Hinde recommends they, “stick to the key tenets of investments: stay diversified, focus on the long-term and seek the advice of a professional.”
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