California CRE News In Your Inbox.
Sign up for Connect emails to stay informed with CRE stories that are 150 words or less.
Record Stock Market Swoon Doesn’t Reflect Strong Economic Fundamentals
The Dow industrials tumbled nearly 1,600 points at one juncture Monday, eventually closing down 1,175 points, but market experts say don’t blame the 4.6% plunge on any economic problems. In fact, most agree the biggest point decline during a trading day in history shouldn’t be blamed on the U.S. economy because it is healthy, nine years into an expansion.
The job market is strong, the housing sector is improved, consumer confidence is solid, and the manufacturing sector is rebounding. Households and businesses are spending freely, personal debt is lighter and major economies around the world are also growing.
The economic vigor is what has investors worried. Stock market experts believe the drop could be attributed to inflation fears and higher interest rates. Down the road, that could hurt corporate earnings, and stock prices, especially if the Federal Reserve raises rates too high or too fast.
The monthly U.S. jobs report last week revealed a 2.9% surge in average wages in January from 12 months earlier, the most abrupt year-over-year gain since the recession. But by comparison, Monday’s stock drop was not close to 1987’s Black Monday carnage or the financial crisis of 2008.
For comments, questions or concerns, please contact Dennis Kaiser
- ◦Economy
