Real GDP at new all-time high

[TomCADem]

Source: CBS Marketwatch

But there’s a potentially bigger story imbedded in this morning’s GDP report that should not be overlooked: The United States economy — in inflation-adjusted terms — has now completely recovered from the Great Recession of 2008-2009. Read more about GDP acceleration.

In fact, assuming the government’s estimate that real GDP grew at a 3.2% rate in the fourth quarter, it is now 2.5% higher than where it stood at its previous all-time high in late 2007.

This doesn’t mean that there aren’t economic problems, needless to say. The unemployment rate remains stubbornly high, to mention one prominent example. But the stock market, being a cold and calculating mechanism, focuses ruthlessly on different factors, such as corporate earnings.

Which raises the question of why the stock market isn’t itself in new all-time territory, along with real GDP. The Dow Jones Industrial Average, for example, is currently some 15% below its late-2007 high—even despite the market’s impressive recent strength.

Read more: http://www.marketwatch.com/story/real-gdp-at-new-all-time-high-2011-01-28

[rfranklin]

1. Gotta love those"jobless recoveries!"

Man, with this productivity we can probably get rid of another 10 million jobs!

[rgbecker]

2. Assuming the stock price reflects the value of the company...

The loss of real estate value alone could account for some of the drop from late 2007 highs. Though it could be argued that confidence is still the main missing ingredient.

[HereSince1628]

3. re stock prices--Gotta put those Fed sponsored bonuses somewhere.

It's just another bubble in the making.

In "THE OLD DAYS" an modest investor looked to play season and business cycle movement (rising and falling prices) of stocks to make money. Today, the big players look to inflate bubbles as a mechanism to prey upon investors.

Currently, I'm very suspicious of stocks showing rising P/E ratios and want to know there is some other reason than price inflation behind it.

[rgbecker]

4. For the next several years its going to be about the inflated Dollar.

Still easier to hold stock than a bunch of barrels of oil in the back yard.

[Kolesar]

5. That's a clever turn of a phrase

if you mean that equities are a hedge against the rising price of oil and attendent inflation.

[mistertrickster]

6. Exactly. Big investors are so big, they create buying and selling simply by

buying and selling.

Cf. George Soros driving down the UK pound simply by telling people he was selling pounds. The dude made a billion dollars shorting the pound.

[JJW]

7. Funny numbers

We are growing at 3.2% snnuslized, but over past 4 yrs we've only grown 2.5%