Dow 50,000: A Supply-Side Miracle

Stephen Moore
Tue, 10 Feb 2026 11:45:03 -0800
Opinion

When I first arrived in Washington in 1982, the Dow Jones hit a low of 800. You may not believe that, so feel free to look it up.

If anyone had predicted that in a little more four decades the Dow would surpass 50,000, they might have been admitted into a mental institution. But U.S. stocks have grown 60-fold (not counting inflation). Even accounting for inflation, the Dow is up about 12-fold.

We have lived through the greatest period of wealth creation in perhaps the history of the world.
Updated: Tue Feb 10, 2026

When I first arrived in Washington in 1982, the Dow Jones hit a low of 800. You may not believe that, so feel free to look it up.

If anyone had predicted that in a little more four decades the Dow would surpass 50,000, they might have been admitted into a mental institution. But U.S. stocks have grown 60-fold (not counting inflation). Even accounting for inflation, the Dow is up about 12-fold.

We have lived through the greatest period of wealth creation in perhaps the history of the world.

No other nation has come even close in modern times. Consider that American publicly traded companies are now worth more than $70 trillion.

Is China catching up? Yes, but they've got a lot of work to do despite having four times more people than we do. The market cap of all Chinese companies is estimated at roughly $11 trillion. The market cap of all European Union countries is roughly $16 trillion. Japan's companies are worth $7 trillion.

We are worth roughly as much as the rest of the world combined, even though we only have 5% of the world's population. THAT should get you out of your chair shouting "USA, USA, USA!"

This wealth spurt didn't happen by accident. It's the triumph of good economic policy — including the steep decline in tax rates and tame inflation bookended by two of our greatest pro-business presidents, Ronald Reagan and Donald Trump.

Rewind to 1981 when Reagan came into office: Inflation was running at about 12%, the top income tax rate was 70%, the corporate rate was 46%, the estate tax was 70%, and the capital gains rate was 28%. The economy was in a state of collapse.

Today inflation is roughly 3%, the top income tax rate is 39.6%, the corporate rate is down to 21%, the estate tax is 40%, and capital gains taxes are taxed at 23.4%.

Supply-siders like Steve Forbes, Arthur Laffer and Larry Kudlow should take a bow. They were right about lowering tax rates and inflation igniting growth and prosperity. The income redistributionists were wrong that the rich would pay much less taxes. They pay more. The top 1% now pay roughly 40% of the income tax.

That's the good news. The bad news is that so many Democrats haven't learned the lesson that lower tax rates create more prosperity. By the way, the evidence also shows that even with these lower tax rates, the richest 1% pay a higher share of the tax burden than ever before.

The city in the U.S. with the highest combined federal/state/local income tax rate is New York City. The new mayor, Zohran Mamdani, was elected promising that millionaire and billionaires would pay more taxes to close a $10 billion deficit.

California is our most populous state. The liberal Democrats want to put a first-in-the-nation wealth tax on the ballot that has already created an exodus of millionaires and billionaires out of the state.

Meanwhile, back in Washington, D.C., Trump is predicting the Dow will reach 100,000 by the time he leaves office. That's a bit of a moonshot, for sure, but the last four decades prove supply-side miracles can come true.