Stocks took a deep dive to start February with all the major indexes falling more than 2% Monday after a dismal January. The Dow Jones Industrial Average (^DJI) ended last month down more than 5% and the S&P 500 (^GSPC) down more than 3.5%. The pullback has come amid concerns about the Fed scaling back on bond buying, emerging markets turmoil, and worries about global growth. Also, a look at the recent economic news coming from the U.S. is less than thrilling.
Weaker-than-expected ISM manufacturing data out Monday sent stocks south, and auto sales for January came in weaker than expected -- both numbers were said to be affected by unseasonably cold weather.
While it may be hard to gauge whether the bad news is truly bad and, if so, to what extent, we've also seen indications of increasing economic strength.
U.S. gross domestic product growth came in at an annualized rate of 3.2% in the last quarter of 2013, driven by the strongest consumer spending in three years. And this comes after the third quarter posted a 4.1% annualized GDP growth rate. The economy has been picking up and many economists forecast it will grow 3% this year, significantly better than 2013's 1.9%.
So are we seeing a true economic recovery? Heidi Moore, U.S. finance and economics editor at The Guardian, tells us in the accompanying video that "what we've had is a recovery that's been really rocky... it's been incredibly slow and not beneficial to huge swaths of the American population."
Moore says while GDP has improved, unemployment is still a major issue with a lot of people dropping out of the work force. Moore also points to the housing market, noting that rising home prices doesn't mean a recovery.
To call this a recovery is "offensive to a lot of people who are struggling and even living in poverty right now, when we should be addressing those problems," she argues.
So what about the solutions? President Obama in his State of the Union address talked about asking CEOs to hire the long-term unemployed. And a New York Times article details how businesses catering to the middle class are struggling. What will incentivize corporate America to change its hiring practices? Check out the video to find out what Moore thinks!
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