The Lobby Observer

Scare on Wall Street for the United States in October

Bethany Woodcock '19, Managing Editor

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With the threat of a longer trade war with China intensifies, the U.S. braces itself for a recovering month of November. On Friday, October 26, the Dow dropped 296 points, 1.2%, while the Nasdaq fell 3.8%, its worse since March. With the index in the state it is, economists have compared this month of October to November of 2008, the greatest recession since the Great Depression.

The market record highs in January and September are known as the “twin peaks,” a nearly identical pattern to what happened in 2007 before the recession of 2008, and in 1999/2000 before the dotcom bust.

This is all happening only one month after the S&P 500 was trading below where it was on December 22, 2017, the day President Donald Trump signed tax cuts into law.

However, given this information, it is critical to keep in mind that there are parts of the economy that are doing well, leaving some skeptical to a recession. The nation’s unemployment rate is at 3.7%, the lowest it’s been in 49 years. 250,000 jobs were added in October, marking a record growth, and wages are up.

The economy is looking like it is taking a positive turn, as the unemployment rate is very low. Though, soon as it starts to rise again, it will enter a vicious cycle of consumers holding back their spending, businesses hiring less people, incomes dropping, unemployment rises more, and the economy goes into recession.

So is the nation’s economy hinting at another recession? Economists can look at patterns and data from previous economic situations and trends, and attempt to make predictions. Only time will tell if in 2019, or even 2020, we fall into another recession.

Sources: New York Times, NPR, CNN

https://www.nytimes.com/2018/03/23/business/trump-recession-forecast.html

https://www.cnn.com/2018/10/17/perspectives/mark-zandi-next-recession/index.html

https://www.cnn.com/2018/10/26/investing/stock-market-today-dow-nasdaq-amazon/index.html

https://www.cnn.com/2018/10/26/investing/stock-market-peak/index.html

 

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Scare on Wall Street for the United States in October