It seems to me that when people talk about how good or bad the economy is, they really mean Dow Jones. Stock values. This is like taking blood pressure to measure eye sight.
Haven't people really discovered already that markets can be extremely erratic and volatile? What do they think the stock market bubbles are? Did the 14,165 record Dow in October 2007 really represent the healthiest economy USA ever had?
So why are everyone looking at stock values when they are trying to fix the economy? My guess is that because that is where the recession effects first hit for those in charge; people with enough money to invest in the stock market. This includes politicians. Now they are trying to make stock values go higher again. Why? Shouldn't the markets try to rebalance itself after the bubble? Why should the stock prices be at the same level than during the bubble market conditions?
So what is the right meter to follow? Well, I think that a healthy economy is a sustainable one. One with good immune system. One where markets are forced to follow fundamentals. This would mean balanced government budgets, balanced import/export, high savings rates, low government debt and low inflation.
This would also mean no more crazy stock market booms. But do we really need them? Now that we've seen where they lead?