The Dow Jones Industrial Average passed the 18,000 mark for the first time every Tuesday, although one expert says it’s nothing to get excited about.
While it’s a much-touted milestone, Mark Scheffler, a financial planner with The Appleton Group, says the number is artificially inflated by government spending. “In the last few years, we’ve actually seen significant manipulation of these large index prices because of the $8 trillion of stimulus that’s been in place for the last five years or so. We see these indexes going higher and higher, but people have to realize that a lot of it is artificial. Most of our competitors believe that up to 86 percent of the Dow is actually attributable to stimulus and not due to economic growth.”
Scheffler says the S&P 500 is actually a better gauge of the economy. Adjusted for inflation, he says it’s actually lower than it was in 2000.
If the federal government were to cut off stimulus spending, Scheffler warns the Dow would likely crash.