Don’t underestimate the resilience of the US economy

According to a metric for the US economy, the Dow Jones Industrial Average, the past 100 years seem like a long jaunt to prosperity.

Market crashes, recessions and depressions, wars, pandemics and other economic shocks all appear as bumps in the road. On average, the Dow rose 9% a year.

The truth on the ground was more complex. Millions suffered during the economic downturn and half a million died in overseas conflicts. America faced fascism, communism and terrorism, even if ruptures along political, class, racial and gender lines sometimes turned our streets and seats of power into battlefields.

But the economy and the market continued to turn.

If there is a lesson we learned from the immersion Barrons Archives in our anniversary year says: Don’t underestimate the resilience of the US economy and the stock market. We’ve seen this theme over and over when we released a number of retrospectives in 2021 – and the resilience is still strikingly evident.

It’s Barron’s 100that anniversary

Read more about 100 years of financial journalism.

When the Covid-ravaged economy shrank in 2020, it was only the 19th time since 1920 that real gross domestic product had declined compared to the previous year. And nine of these years took place between 1930 and 1949, as a result of the Great Depression or demobilization after the Second World War.

Even 2020 appears to be an outlier, with growth expected in 2021 and 2022, despite recent downgrades due to the Omicron outbreak.

Big leaps in GDP were also limited to the volatile 30s and 40s. Most importantly, it has been a steady increase in GDP, from an estimated $ 670 billion in 1920 to a record $ 21.43 trillion in 2020. That’s a 30-fold increase, meaning that the US GDP grew about ten times as fast as the population, which tripled from 106 million in 1920 to 331 million a century later.

100 years ago America was a smaller, poorer and very different place. Most of the people lived on farms with no electricity or house plumbing. Horses outnumbered cars. Business and politics were the sole domain of whites. Women had the right to vote but were still second-class citizens. Jim Crow laws ensured that blacks were not fully emancipated.

The country was also hit by the 1920-21 Depression, the country’s worst economic downturn to date. It was a hell of a bad time for Clarence W. Barron to do a weekly financial bulletin. But he had seen the United States transform from an agricultural to an industrialized nation, and he felt that the American business spirit was unstoppable.

He was right. Henry entrepreneur


and Thomas Edison to Elon Musk and Mark Zuckerberg, to paraphrase the founder of Facebook, moved fast and broken things and turned new technologies into life-changing new industries.

Our founder, Clarence Barron, in 1921.

National Photo Company Collection / Library of Congress

They also created companies that last.

General electrics




Sherwin-Williams and many other names known today are from the 19th century or earlier. These companies are the backbone of the economy, the strength that gives it such resilience.

Barrons had doubts now and then. We once worried that modern leaders would “appear pimply alongside the speculative kings of the last century,” but that was in 1936, and since then many worthy successors have emerged to challenge the titans of yore.

Here are some who have helped keep the economy going for the past 100 years.

Cars were a dangerous outdoor proposition until the late 1920s, and there weren’t many roads to drive on. They were novelties, toys for the rich, and few saw that change.

Henry Ford saw greater opportunities. He perfected mass production techniques that enabled him to build the Model T faster and cheaper than the handcrafted competition. Ford “put the engine within the reach of a normal wage earning family and the cost is half that of a horse,” wrote Barron in 1924.

While most Americans still relied on actual horsepower for transportation and work, the “peak horse” was reached. Ford’s cars and tractors drove horses to pasture. Even the best days of the railroad were over.

Henry Ford pictured with his first and 10 millionth cars. Over 15 million Model Ts were built between 1908 and 1927; In 1918, they made up half of the cars on America’s roads.

Historica Graphica Collection / Heritage Images / Getty Images

Road construction would catch up with car purchases and culminate in the Interstate Highway System that unleashed America’s auto culture – along with its suburbs, urban sprawl, and pollution.

Ford’s company is now entering the electric vehicle era. His legacy is complicated, however: he was a vocal anti-Semite who hired scabs and saw conspiracies everywhere. “Moral greatness” like Barrons wrote in 1923, does not always go hand in hand with industrial genius.

This magazine has rarely reviewed movies, however fantasy


A full-length cartoon from 1940 starring a famous mouse caught our attention.

The “greatest change in the art of film since the appearance of the sound” Barrons wrote, “the new sound generation technology” was in fantasy. A major reason the audience felt this was that Disney “was right in the bay with the orchestra” because Disney had used eight state-of-the-art audio oscillators that were bought by a new company.

Hewlett Packard

Bill Hewlett and David Packard famously began their work in a rented Palo Alto garage, now known as “the birthplace of ‘Silicon Valley’.”

Oscillators were the beginning of a very fruitful partnership. In 1976, Hewlett-Packard was one of the few companies that “combined technological excellence, crackerjack marketing and financial soundness,” wrote Alan Abelson: Barrons celebrated columnist and editor.

The founders retired from active management in the late 1970s and some big names followed, including Carly Fiorina. In 1999 she merged with Compaq, which made HP the No. 1 PC manufacturer – and cost her the job.

Many mergers and acquisitions later, HP Inc. is the legal descendant of the start-up Palo Alto. And the work that was started in that garage helped make an analog world digital.

Muriel Siebert had to announce the news herself.

“First Lady Member of the New York Stock Exchange!” Read the ad with Siebert’s smiling face that came in Barrons on Jan. 8, 1968 and four days earlier in the Wall Street Journal.

“First Lady Member of the New York Stock Exchange!” Read Muriel Siebert’s ad that ran on January 8, 1968 at Barron’s.

Not in the credits

Siebert started as a trainee equity research trainee for $ 65 a week at Bache & Co. in the 1950s and eventually became the first woman to run one of the NYSE’s member firms.

Siebert Finance

was among the first to offer discount trades and was also a leader in the transition to online trading.

Siebert, who later became New York State’s first female superintendent, was delighted when she passed away in 2013, when jobs across the country had changed with the inclusion of women of color.

In finance, the capital managed by private investors is known as dumb money. This is in contrast to the smart money of large financial institutions, whose resources and influence enable higher returns.

By creating the index fund, Jack Bogle made the stupid money a lot smarter. The concept is simple: because the S&P 500 index regularly outperforms managed mutual funds, a passive fund made up of S&P 500 stocks would outperform managed funds too. And all of this without any fees.

“This is a new and unique investment concept whose time has come,” said Bogle Barrons 1978, two years after the forerunner of the Vanguard 500 index fund was launched.

Indexing would not start until the 1990s. But by 2019 index funds had overtaken actively managed funds in assets after “knocking out active funds for a decade.” However, passive investing brought with it critics who “warn of market downturns,” we wrote in 2018, noting that one analyst “went so far as to label index investments as“ worse than Marxism ”. ”

Bogle, who died in 2019, realized he didn’t want everyone to index. But he democratized the once exclusive Wall Street club. After his death we wrote: “If one man can be held responsible for today’s market – for better or for worse – it is Jack Bogle.”

It wasn’t long before Clarence Barron’s bet on American business ethics proved prescient. Just a few months after his magazine’s debut, on May 9, 1921, the Depression ended and the Roaring Twenties began. Until 1927, Barrons The circulation had reached 30,000.

Barron made the connection between public information and markets. Wall Street benefits from opacity; The task of the financial press is to shed light on the darkness and to give “the thoughtful investor” the chance to “move the world of wealth”, as he put it.

As Barrons entering its second century, the US economy is showing little sign of slowing. It is impossible to minimize the damage from the pandemic as 800,000 U.S. deaths and Omicron create new falling waves. Still, the economy seems to be shrugging as today’s leaders and workers find a way to keep things going. The economy is boiling.


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