Weak Growth Masking a Solid Economic Recovery?

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The nation's economic growth rate may be slow, but the U.S. housing and stock markets are soaring.

The Dow Jones industrial average closed at its highest level in five years Tuesday, nearly hitting the 14,000 mark and only 200 points away from its all-time high.

The ongoing surge in the stock market is good news for American investors. The average 401k retirement account is up about 20 percent over the last year.

"These worst case scenarios that people were looking at in 2008, they can start to say, 'Alright, we're not going to go there,'" Jon Hilsenrath, chief economics correspondent for the Wall Street Journal, said.

The housing market is also pushing forward. Home prices rose 5.5 percent in November compared to a year ago.

"This is a miracle in motion," business consultant Barbara Corcoran said. "We haven't seen this in probably seven years."

Housing prices have been going up for 10 months in a row. Experts credit the progress to historically low interest rates.

"The mortgage rate's so low. It was just the best time. It was a steal," one Michigan homeowner said.

But while the economy continues its slow recovery, both the Federal Reserve and economists warn that what happens in Washington over the next several months could dramatically change things.

Federal spending cuts are looming, and some say they could throw the economy back into a recession.

Meanwhile, consumer confidence just dropped 8.1 points.

The reason: When lawmakers reached a deal to avoid tax increases for most Americans they did not extend the temporary cut on Social Security taxes. That means Americans are bringing home less money in their paychecks.

Employers have added an average of about 150,000 jobs a month for the past two years. That's not enough to lower the unemployment rate, which remains stuck just below 8 percent.

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CBN News
Efrem Graham

Efrem Graham

News Anchor & Reporter

Efrem Graham is an award-winning journalist, who comes to CBN News from the ABC owned and operated station in Toledo, Ohio.  He received his master's degree from the Columbia University Journalism School. He also holds a bachelor's degree in English Literature from the Richard Stockton College of New Jersey.  Follow Efrem on Twitter @EfremGraham and "like" him at Facebook.com/EfremGrahamCBN.