A major cause of our confusion about the state of the economy is our choice of indicators. The Dow-Jones average is one indicator, but it is primarily an indicator of the monetary value of the thirty stocks that it incorporates. Some think that the performance of those thirty stocks is a fairly accurate indicator of the general performance of other stocks or of the state of the stock market. It takes another leap to conclude that the Dow-Jones average is indicative of the state of the entire economy. That leap is not justified.
Economists use other indicators of the health of the economy.
One of the most commonly used is the GDP, the gross domestic product, which is a total of all the new production in an economy during a period, a year, measured in dollars. GDP is seriously problematic as a useful indicator of the state of the economy, both for what it includes and for what it leaves out. It includes everything that is newly produced during that period, including cigarettes, cancer operations, and funerals. It excludes anything that is re-used or recycled, since they are not new products. It excludes any activity that does not involve a financial transaction, such as housework and child care.