An interesting statistical point

The U.S. economy has endured equally long stretches of poor performance in the past. For example, the Dow Jones Industrial Average was actually lower in 1982 as it was in 1966—16 years stuck in neutral. Real median household income was lower in 1983 than it was in 1969—14 years of no net gains. Yet the economy recovered and scaled new heights.

The recent \”lost decade\” has happened before. It\’s just that this time as a quirk of timing it happened to be 99 to 09….thus enabling people to say \”lost decade\”.

2 comments on “An interesting statistical point

  1. The obvious thing here (at least with the share indices) would be to do a rolling 10 yr % change. The problem is I can’t find a ‘total return’ (ie including dividends) index back before 1970, and I think this probably biases the retuns in favour of more recent time periods. Anyway using the S&P 500 (better than the DJIA) and looking at the % change over 10 years, the very worst (this is back to 1928-1937) was Jan 1940, when it was down 59% over the past 10 years. The second worst however was March 2009, when it was down 36.7% over the preceding 10 years. The best, incidentally, was March 1999 when it was up by over 390%.

  2. The DJIA, not a good index, was actually slightly worse in 1973 on a 10yr basis than in 2009 (as well as 1940 as with the S&P 500). However it wasn’t worse (it goes back to 1896) at any time before that.

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