The Dow broke records last Thursday, closing at over the 14,000 mark for the first time, despite rising oil prices, rising interest rates and even a warning from normally cheery Federal Reserve Bank Chief Ben Bernanke about a housing market downturn with more room to run.

Over the past year, the Dow Jones index has behaved as if it were invincible. The index, which comprises 30 of America’s biggest and best known corporations, smashed through the 12,000 level in October 2006, then through 13,000 in April. The index hit 52 new highs in the past 10 months on its way to setting Thursday’s new record.

But as the stock market soars, some find it strange that the economy only grew at an anemic 0.7 percent during the first quarter.

Part of the disconnect could be due to the fact that the U.S. dollar has fallen so dramatically.

Many of the giant corporations included in the Dow 30 and other indices generate significant revenue streams overseas. When companies like Coca-Cola, McDonald’s and Hewlett-Packard convert overseas earnings into U.S. currency, the falling U.S. dollar gives the illusion of soaring sales.

It is no coincidence that companies with large international operations are generating record earnings as the dollar hits record lows.

On Thursday, shares of International Business Machines Corp., the world’s largest technology services company, soared, helping to push the Dow to its new high.

“Three letters: I B M. You have the bluest of the blue-chip stocks with the best quarter they’ve had in five years. You don’t have to look too far as to why market sentiment is doing well,” said Michael James, senior trader at Wedbush Morgan in Los Angeles.

But as the effects of a slowing U.S. economy begin to affect domestic consumption, corporate profits due to exchange rates may be more than negated.

A falling dollar also hurts shareholders. Though it may temporarily benefit corporations with international operations and thus boost share prices, it hurts investors in the longer term.

For example, if you had bought the Dow Jones at its peak in January 2000, after adjusting for inflation and using the government’s own statistics, you would still be in the hole even with Thursday’s new high. The Dow would need to cross 14,408 to set a real, inflation-adjusted high.

Other indices have performed even worse than the Dow. The Nasdaq Composite index, for example, hit 2,724 on Thursday, far below its March 2000 high of 5,048. The Russell 3000 index, which is supposed to mirror the U.S. stock market as a whole, is only up 5.2 percent since its last major high more than seven years ago. When adjusted for inflation, the Russell, which just hit 903.67, would need to be over 1,000 for an actual new high.

In real terms, the stock market has not broken into new highs at all. Not yet anyway. Stocks have been trending up over the past year. According to the New York Times, part of that action is due to corporations plowing profits into share repurchases instead of into research and product development, or into increasing production and expansion. Although share buybacks drive up the price of stock, they do little or nothing to better the company.

If you are looking to the stock market as an indication that the economy is going to start zinging along or as an excuse to make that next big splurge, you might want to reconsider. As the Trumpet has said, it is really a time to tighten your seatbelt; rougher economic roads are ahead.