On this day in economic and financial history...
President Bill Clinton's economic team made its bid to be among the most historically incorrect economic forecasters in history on Feb. 11, 2000. That day, the administration released its last annual economic survey, which predicted, among other things, 2.9% GDP growth in 2000 and 2.6% in 2001, with an average of 2.1% through the end of 2003. Martin N. Baily, the chairman of Clinton's Council of Economic Advisers, stepped forward as a modern-day Irving Fisher (of 1929's "permanently high plateau" fame) with the pronouncement that "as long as we stick to the fiscal policy we have there is no reason this [economic expansion] shouldn't continue indefinitely."
In reality, the Dow Jones Industrial Average (DJINDICES:^DJI) had peaked almost precisely a month earlier, and the overheated Nasdaq was set to pop a month later. U.S. business activity peaked a year later, and GDP fell into negative territory in 2001 as the dot-com bust combined with the aftermath of 9/11. For much of the following decade, U.S. GDP growth remained below its historical average and the 2.1% growth rate predicted for the first four years of the new millennium.
As if to ensure that Baily's optimism would be as short-lived as possible, Pets.com went public that very same day. Fresh off blowing millions of dollars on ultimately pointless Super Bowl ads, Pets.com debuted on the Nasdaq on Feb. 11, 2000 with a thud, gaining less than $0.07 in trading on its IPO price of $11 per share. The laughable analysis of IPO Monitor analyst Gail Bronson pointed out that "maybe they didn't do enough to market themselves," which probably meant that Ms. Bronson was not much interested in watching the Super Bowl. Of course, losing $60 million on $5.2 million in sales can be a red flag, too. Pets.com quickly became one of the dot-com era's biggest laughingstocks, filing for bankruptcy within a year of its IPO.
A legendary beginning
Happy birthday, Japan! According to legend (and the early post-feudal Meiji government), Emperor Jimmu founded Japan on Feb. 11, 660 B.C. The first Emperor of Japan, Jimmu's name is derived from Chinese forms and Buddhist traditions, which makes him almost certainly a mythological creation, or at least a heavily embellished historical figure; he is said to be a direct descendant of the sun goddess Amaterasu, after all.
Although Japan has a long and storied history, only in the last half-century has the nation really become a dominant global economic power. Japan's GDP grew from just $44.3 billion in 1960 to $5.5 trillion in 2010, which translates to an incredible 10.1% annualized rate of growth. Even if we adjust 1960's GDP for inflation, Japan has still enjoyed real annualized GDP growth of 5.8% for that half-century. If Emperor Jimmu had been more of a capitalist, we might all be speaking Japanese today.
Welcome to the Garden
The currently operating Madison Square Garden opened on Feb. 11, 1968. Featuring a joke boxing match between comedian Bob Hope (fighting as "Chicken Delight") and retired pugilist Rocky Marciano, the arena's unveiling was attended by 19,870 service members brought together by Hope's longtime nonprofit of choice, the USO.
The fourth stadium so named in New York City, MSG has since become one of the most expensive stadiums ever built, with a total inflation-adjusted cost of construction (including two renovations) of nearly $2.2 billion. Even in the midst of its latest renovation, MSG still managed to be both the second-highest-grossing entertainment venue in North America in 2011 and the top venue of its class for the first decade of the new millennium in terms of gross ticket sales. Since MSG has fewer than 21,000 seats maximally available, its impeccable performance highlights the importance of location (it's built right on top of a subway station) and reputation. Hosting an event virtually every single day of the year doesn't hurt, either.
A little laziness can be a good thing
The La-Z-Boy (NYSE:LZB) reclining chair was purportedly invented on Feb. 11, 1928 by cousins Edward M. Knaubsch and Edwin J. Shoemaker. Originally prototyped out of orange crates, these chairs boasted the earliest form of reclining mechanism for which the company would become famous as it grew in scope. In its 2012 fiscal year, this furniture company with humble origins reported $1.2 billion in sales, much of it made through its 850 branded outlets around the world.
A little coal in your stocking
On Feb. 11, 1808, Jesse Fell, a judge in Wilkes-Barre, Penn., first made use of anthracite coal as a source of heating fuel. This high-grade coal, fairly common in Pennsylvania, was clearly superior to wood in terms of heat and energy efficiency, and its rising popularity helped bolster America's infant Industrial Revolution.
Although it was eventually supplanted by petroleum as the world's preferred fuel of commerce and industry, anthracite remains a popular choice for metallurgical purposes. Pennsylvania remains a major producer of anthracite, but its output has fallen steeply since the turn of the century from a peak of 5.2 million tons in 1998 to only 1.7 million tons a decade later.
The Dow also rises
On Feb. 11, 1932, the Dow paused on its plunge into the worst bear market ever seen to record one of the best single-day gains ever seen, finishing with a 9.5% improvement on the previous day's closing price. Traders rejoiced over a bill making its way through Congress that would loosen the money spigot at the Federal Reserve's discount window, leading the market to its broadest advance in two months, according to the Chicago Tribune.
The less accurate market analysis of the day pegged the 2.6 million-share day as having added between $1 billion and $3 billion in total value to a market that was then about 80% off its 1929 high. AT&T and General Motors (NYSE:GM) together accounted for $220 million of that gain, underscoring the importance of leading industrial concerns to the American economy, even in the Great Depression. However, this would only be a brief respite in the final months of the early 1930s bear market, which did not bottom out until that summer, mere days after Franklin D. Roosevelt's Presidential campaign became official with his nomination at the Democratic National Convention.
They have the plants, but we have the power (part 2)
Five years later, on Feb. 11, 1937, GM made waves again when it agreed to the first union contract in the history of the American auto industry. This marked the culmination of the first widespread sit-down strike in American labor history, which had seen violence and bitter standoffs between union leaders and GM executives. To end the strike, GM president Alfred P. Sloan agreed to an aggregate annual wage increase of $25 million and officially recognized the United Auto Workers union's right to exist, organize, and petition for improvements to its situation. The union's success emboldened workers at Chrysler to strike shortly thereafter. That company's employees were soon covered under the UAW's umbrella, and even Ford (NYSE:F), historically generous to labor but resistant to unionization, agreed to a union contract by 1941.
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