Wednesday, July 18, 2007

The State of the Economy

Here's a blog I started last week and was still working on as the DOW dropped nearly 400 points today.


It's a topic that I've avoided, but even though I haven't taken a course yet on economics, I'll give it a shot.

Anyone who pays attention to the news is probably already aware that the dollar has been taking a plunge in recent years, more specifically it has seen a significant decline in the past week or so. While the dollar is falling, the housing market continues a slump that has started to gain momentum in recent weeks. Despite these key factors that analysts use to measure the state of the economy, the only good news is that the DOW topped 14,000 points for the first time this week, and some are still viewing this milestone with weary eyes.

It seems when President Bush says that the economy is booming, he's looking at only a few statistics that don't add up across the board. To put things in perspective, as I'm writing this, the dollar to Euro exchange rate has dropped from 1=1 in late 2002 to $1=.72 in recent days. The story on that prompted me to write this shows the dollar's weakening value compared to the Russian Rupie, which was $1=32 in 2002 and is now $1=25.5. What caught my eye about it? It was in a story related to the cost of a vacation to the International Space Station, which currently costs $25 million. A lot of money, but for those flying in 2008 and 2009, the price will have nearly doubled to $40 million.

Also contributing to the decline are every rising gas prices that some analysts predict could reach $100 a barrel by the end of the year. What triggered the sell off today was an every weakening housing market and worries over energy.

My point? The economy is in a state of decline. While the stock market might not show it now (when I started this post), it conceivably will by the end of the year, as some experts are predicting.