Posted by: Michael Mandel on September 24
I’ve been thinking about whether to put more money into the stock market, or take my remaining money out. I’m still undecided, but here’s the thing. When I looked back over the last 10 years, I discovered that the inflation adjusted return on the S&P 500 was -17%. Including dividends, the inflation-adjusted return was only -2%.
That’s astounding, especially given the supposedly high profits and the low interest rates.
If the stock market accurately reflects the state of the U.S. economy, that means the past ten years have been an era of stagnation for the U.S. That’s a perspective I’ve been moving towards, unfortunately, over the past couple of years.
That suggests the excess buildup of debt was the result of economic weakness, rather than the cause of weakness. It also goes in parallel with the almost nonexistent real wage growth over the same period.
Michael Mandel, BW's award-winning chief economist, provides his unique perspective on the hot economic issues of the day. From globalization to the future of work to the ups and downs of the financial markets, Mandel-named 2006 economic journalist of the year by the World Leadership Forum-offers cutting edge analysis and commentary.