Editor's note: Fareed Zakaria is an author and foreign affairs analyst who hosts "Fareed Zakaria: GPS" on CNN on Sundays at 1 and 5 p.m. ET.
Fareed Zakaria says fears of financial collapse are well behind us, but workers may still face tough times.
NEW YORK (CNN) -- The Dow carved out another one-year high Thursday, as rising oil prices and a late-session rally in commodity stocks overshadowed any bank sector weakness after Citigroup and Goldman Sachs' profit reports.
The Dow Jones industrial average gained 47 points, or 0.5 percent, according to early tallies, ending above 10,000 for the second session in a row. The Dow is currently at its highest point since October 3, 2008, when it closed at 10,325.38.
Fareed Zakaria, anchor of "Fareed Zakaria: GPS," spoke to CNN about the Dow's recovery.
CNN:This week, the Dow Jones hit 10,000. Does this mean the economy is sound, both in the U.S. and abroad?
Fareed Zakaria: The number is significant because the last time the Dow was at 10,000 was last October, when it was moving in the opposite direction.
However, it is important not to confuse the general economy with the stock market. It is true that the market often improves before the general economy strengthens, but more importantly, it is a symbol of confidence and normalcy in the economy.
It is fair to say the fears of the collapse of the global financial system are well behind us.
What lies ahead may still be difficult, but it now feels like it is in the realm of recession rather than a depression. After the stock market's dramatic fall last year, there is a return to a sense of normalcy.
CNN: Where are the brightest spots?
Zakaria: The emerging markets. They have performed remarkably well. They have shrugged off their panic and continue to grow robustly. China will grow 7 percent this year, India 6 percent, Indonesia 5 percent, and growth prospects remain good in many of the larger emerging markets.
In the past, when the West sneezed, the rest of the world caught a cold. This time, something quite different happened. In fact, it is the strength of the rest of the world that has helped stabilize the world economy, providing growth and cash. In addition, most of America's largest corporations now get almost 50 percent of their revenue from abroad, so if the rest do well, they thrive.
It's a good reminder we are all in this together. In order for the United States to move forward, we need to focus on productivity, innovation and education.
CNN: Is there a difference between the financial state of companies and that of the individual?
Zakaria: Yes, there actually is a big difference. As Zachary Karabell, one of the panelists on GPS this week, points out, what may be great for the capital markets may not be great for the labor markets.
Companies can cut costs, boost production and focus on market gains, and thus post strong returns.
Unfortunately, the individual worker in the United States and Western Europe might find it hard to find a good job. In a nutshell, investors may do well, but workers probably have a hard road ahead of them.
CNN: What can we do to improve prospects for everyone?
Zakaria: No one disagrees that the key is growth. The economy must be restarted, but how to do so is open for discussion. There are two schools of thought. The first is the classic Keynesian approach -- eloquently stated by the historian Robert Skidelsky (also on our show this week) -- if consumers are not spending and are overly cautious, the government must spend to stimulate the economy.
The conservative critique of this option is that the result will be high deficits, which in turn will cause a loss of faith in the American dollar and American bonds.
CNN: What side do you fall on?
Zakaria: Well, only 20 percent of the first stimulus has been spent, so it is not clear if we need more. However, at the end of the day, I do believe that consumer tax cuts in this environment will not serve the desired purpose.
Most will save money or pay down debt rather than spend what is needed to jump-start the economy. The government has to be involved.
CNN: Is President Obama doing everything he can?
Zakaria: He definitely deserves a lot of credit for handling the financial crisis and all the related problems in the housing and automobile sectors. The stimulus was badly designed, and it now appears that the health care bill is also badly designed. The administration must get their act together, or they will need a second stimulus bill.