The main indexes on Wall Street fell at the opening of Monday’s session. The Dow Jones fell 1.71 percent, the Nasdaq fell 6.34 percent and the S&P 500 fell 3.66 percent, Reuters reported. Stock markets around the world recorded deep declines on Monday.
“We’re not there yet (in recession – PAP), but we’re uncomfortably close to it,” said Sahm. She is an economist who developed an indicator called the “Sahm rule”, which allows you to check when an economy is entering recession.
The expert referred to the report on the state of the national labor market published on Friday by the US Department of Labor, which showed a sudden increase in the unemployment rate and a slowdown in hiring in July. Sham noted that such an increase in unemployment has historically coincided with an early recession, hence the concerns visible on Wall Street.
Many experts quoted by, among others, CNN television stations explain that the declines visible on the stock exchanges do not reflect the real state of the US economy. Monday’s events on Wall Street are a reflection of investors’ concerns about, in their opinion, the Federal Reserve lowering interest rates too slowly. As reported by CNN, experts assessed that the US economy is in good shape.
Economic data released in July by the US Department of Commerce was much better than expected. It was predicted that growth in the second quarter would reach 1.9 percent, and in the past quarter it was twice as high as in the first (1.4 percent). This supports the assessment of many experts that the US economy is not in as bad a situation as Monday’s stock market index results would suggest.
The Federal Reserve is currently limiting its forecasts to one rate cut, which is to occur in September. Gregory Daco, chief economist at EY, a consulting firm, was quoted by CNN as saying that the chances of further rate cuts by the Fed have increased. In addition to the cuts announced in September, further cuts may occur in November and December of this year.
At the same time, Daco believes that today’s investor reaction to the labor market report “is disproportionate.” The chief economist of the international audit firm RSM US told American television that it is important not to confuse the market with the economy, and called the declines in stock indices at the beginning of Monday’s session “classic market panic.” (PAP)
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