It’s no surprise that the stock market cheered Americans back home after a long year of economic uncertainty. The Dow Jones Industrial Average rose to a record high of 30,000 points this week, boosted by positive news indicating that the US economy is on the road to recovery. The market’s rally was ignited by encouraging news such as the anticipated approval of a potential coronavirus vaccine, increasing consumer spending, and a strengthening job market as businesses reopen.
This bullish momentum hit another peak when the Federal Reserve announced its commitment to maintain low interest rates and keep pumping more money into the US economy. Along with this news, analysts have pointed to strong earnings reports from many top companies as further confirmation that America’s economy is indeed on the upswing.
The stock market’s impressive performance since November is a sign that investors are encouraged by the first wave of vaccine development, and this optimism could lead to new highs for the already skyrocketing Dow. In the meantime, investors should continue to look for additional signs that the US economy is returning to pre-pandemic levels.
One of the immediate effects of the stock market’s rally is an increase in consumer confidence, which is essential for a sustained economic recovery. With the budget deficit set to hit a record $3.3 trillion this year, the government needs to find ways to reduce the national debt burden and restore the public’s faith in the US economy.
With the stock market welcoming US Americans home in such a big way, it is important to note that consumer spending alone will not fuel the nation’s economic recovery. Small businesses must receive the same level of government support as their larger corporate counterparts in order to get back on their feet and support economic growth. In that sense, the stock market’s rally is only part of the story of the US’s return to economic development.