The downward trend of national stock indexes such as the S&P 500 and Dow Jones have CEOs worried.
With the S&P 500 dropping from 2,080 to 1,860 dollars in the past month, as well as oil selling for only $32 a barrel, CEOs are concerned that current economic trends will lead to another major recession.
“One would have hoped that the trend lines were improving, but they are going in the exact opposite way,” Dennis Nally, Chairman of Pricewaterhouse Coopers told USA Today. “There are very few bright spots to talk through.”
Economists both on campus and in the U.N. do not feel this is the case.
The market has enjoyed a rate of slow but steady growth since the recession following the burst of the housing bubble in 2008. In that time, the market experienced a dramatic downward spiral that finally resulted in the U.S. government’s bailout of the American economy in 2009.
While the market has experienced decrease in the last quarter, this is to be expected.
“We’ve opened this year up with a fairly dramatic decline in the U.S. stock market. The market will continue to bounce around quite a bit. There’s a lot of uncertainty out there, but in terms of overall economic performance, we seem to be stuck in a pattern of slow growth,” Randall Waldron, professor of economics, said.
“The stock market is often very volatile. We know that sometimes, a downturn in the market can be a sign of economic downturn, but not always. The stock market crashed pretty severely in 1987, but nothing bad happened to the general economy. It was several years until we had any kind of recession, and even then it was pretty mild,” Waldron said.
An update from the International Monetary Fund released last week said, “a modest and uneven recovery is expected to continue.”
The IMF is an organization started by the U.N. with the purpose of “fostering global monetary cooperation, securing financial stability, and sustainable economic growth, and reducing poverty around the world,” as told on its website,
Much of the worry stems from the great decline in oil prices. Increased production in oil, due in large part to fracking, has led to an overflow of product. In the same report, the IMF said, “oil prices have declined markedly since September 2015, reflecting expectations of increases in production by the Organization of the Petroleum Producing Countries.”
While it is not expected that the economy will experience a great recession like that of 2008, it is very possible that the economy could go through a lighter recession.
Luke Powers, junior international business major, said, “A lot of news reports and statistics show that we’re at a chance of having another recession and there is a chance of that. However, the key differences point to sustainable growth rather than inflated growth in the future.”
Waldron had a final word on recessions: “The likelihood of a severe recession like that of 2008 is pretty slim, based on historical norms. Major recessions tend to be once in a generation type things. Now, I’m not saying there’s not a recession ahead, possibly in the near future, but we’ve typically had recessions every six to eight years and they’re usually very mild.”