Stock Plunge Would Need to Get Much Worse to Derail Economy...

Stock Plunge Would Need to Get Much Worse to Derail Economy Economy​

22 minutes ago (Feb 06, 2018 09:13) ​

"Bloomberg) -- Monday’s stock-market plunge is unlikely by itself to make a significant dent in a U.S. economy that’s enjoying solid gains in spending and hiring, though it has the potential to rattle consumer sentiment, which soared after the November 2016 election.
The impact on growth, according to economists, will depend on whether the market keeps falling, or otherwise fails to rebound and build on last year’s strong performance, which saw the S&P 500 rise 19 percent. The benchmark gauge tumbled 4.1 percent on Monday at the close in New York, the most since August 2011.
“This is the stock market. This is not the economy,” said Allen Sinai, president of Decision Economics Inc. in New York. “Underneath, the U.S. and world economies look very good. The stock market outran the state of the U.S. and world economies and overpriced itself for this early in 2018.”
The declines on Monday erased 2018’s gains. Gauges of consumer confidence, such as the University of Michigan’s monthly survey and the weekly Bloomberg Consumer Comfort Index, tend to parallel the U.S. stock market over time. The Bloomberg gauge reached the highest level since early 2001 in its latest reading last week, while the Michigan index is close to a 13-year high.
“The rise in wealth has contributed to strong consumer confidence and it’s one of the factors that’s led to strong spending,” said Lewis Alexander, chief U.S. economist at Nomura Securities International Inc. in New York and a former Fed official. If the slide in stocks persists, “it can only have a negative impact.”

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