Last week, stock markets had one of their best weeks EVER. The Dow was up 11% for the week. The last time we saw a week like that, the country was suffering from a crisis in confidence of a different sort: Watergate and the Nixon administration.
The month ended on Friday's Halloween rally, an appropriate metaphor for a financial system that seems to be chasing the ghosts of markets past. This month, we dove and rallied based on all sorts of financial indicators. And the leading relic of the past is one of the Street's favorites: the consumer confidence index.
At first glance, it makes sense. We are seeing that the world's economy is tied to the US consumer. When we buy, foreign factories hum, Wall Street is fat and happy and we buy more savvy storage solutions to organize all the stuff we've packed in our closets.
But if the recent crisis has taught us anything, this is not sustainable both economically and ecologically. We need a completely retooled index that demonstrates real gains made against building a new model that attacks the fundamental imbalance in our economy.
We should begin looking at longer range metrics, such as:
- New manufacturing jobs created here, not overseas
- Future manufacturing capacity (i.e., investments in new or upgraded facilities in the US)
- Foreign oil dependence: a measurement of where our oil is coming from
- Strength of alternative energy companies (a new average that could sit beside the S&P and Dow)
- Net consumer savings
I'm sure there's a billion ways to do this. But the point is that the old perspective looks only at where we've been, and we need to start focusing on where we need to go.
