( CNN ) -- After reaching a record high of 14,253.77 on Tuesday , the Dow Jones industrial average rose an additional 0.3 % on Wednesday to reach a new record high of 14,296.39 . First off , the latest Dow number is not really a record . If we adjust it for inflation , the Dow still has a way to go . But is the rising number a sign that the economy , which has been improving sluggishly , is about to improve dramatically ? Probably not . For example , the previous peak in the Dow in 2007 was just before the onset of the Great Recession , and remember what happened then ? Right , the economy crashed . People got scared . Hell broke loose . No -- not really , but there was plenty of fear going around . Flash to present day . Some people are surprised that the stock market is doing so well , particularly in light of such high levels of unemployment . But maybe we should welcome the optimism since it can push along the economy . The steady rise of the Dow since early 2009 has been driven mainly by two factors : the slow improvement in economic conditions and optimism since the recession ended , and the Federal Reserve 's attempt to stimulate the economy using quantitative easing policies . Under the policies , the Federal Reserve has purchased large volumes of financial assets , and the increase in demand for these assets from the Fed has lowered long-term interest rates and put upward pressure on the prices of stocks and bonds . As asset prices increase , people feel wealthier and more secure because of increased value of retirement funds , education savings , and so on , and the increase in wealth and security makes it more likely that consumers will spend money on goods and services . This boosts GDP and employment , and the improved outlook for the economy can increase stock prices even further . A case in point -- my parents . They are retired and did a lot of traveling . But when the 2007 recession hit and wiped out their retirement savings and equity in their home , they stopped traveling and instead began trying to rebuild what had been lost . They hunkered down , waiting for the storm to pass so to speak . Gradually , they started to spend a bit more as stock prices and the economy improved , but they are not yet back to where they were before the recession . My parents are more optimistic now , and that spurs them to spend more , which helps businesses and the economy . There are many Americans who went through similar experiences . If we add all of them together , we can see why things seem better than before . More people feel like we 're on the right track . The high stock market prices reflect this sentiment . But the real question remains : What does the Dow tells us about the future of the economy ? There is some evidence that the stock market can predict economic prospects , but the correlation is unreliable . The improvement in the Dow is a good sign , but let 's not treat it as reading the tea leaves . Just as no one can predict the stock market , no one can really predict the economy , even if the Dow is doing great . The opinions expressed in this commentary are solely those of Mark Thoma .
John Thoma : The latest Dow price is not really a record when accounting for inflation . Thoma : It 's good that the stock market is doing well , but it 's not a reliable predictor of economy . He says Federal Reserve 's policy of quantitative adjustment has contributed to Dow 's decline . Thoma : General optimism has also helped push the stock market up .