Keep Your Eye on the Dow

Posted August 28, 2013 at 4:44pm

While the Dow Jones Industrial Average is up just short of 13 percent over the past year, it has lost almost 850 points since it hit its 52-week high of 15,658.43 on Aug. 2. With the Dow closing today at 14,824.51, that’s a drop of only 5.3 percent.

That recent slide in the Dow surely reflects concern about expected U.S. military action in Syria and higher crude oil prices, but it also is a function of the growing belief of investors that the Federal Reserve will start to taper its policy of quantitative easing.

For the Obama administration, this is a very delicate time. Further weakness in the Dow could undermine consumer confidence which, in turn, could short-circuit the economic recovery and undermine public confidence in the president.

Democrats certainly have reasons (both international and domestic) to be jittery about the political environment, but they should remember that Republicans will still have plenty of opportunities to look foolish, keeping attention on the division within their ranks and their most confrontational members rather than on the president.

And no matter what happens, Democrats will look to blame the GOP for any weakness in the economy or on the jobs front.