Bleak economic news sends market plummeting
October 03, 2011
News on the stock market and the economy in general has been very unpredictable lately, and this is a concern to anyone trying to invest for retirement or protect the retirement savings accounts they already have.
Even if you're one of those people who is pulling out of the stock market and looking for the best cd rates or the best money market rates or simply leaving your money in your checking account, it would be nice to get some clearer signals.
- Are we headed into another recession or are we bouncing along the bottom before heading back up?
- How bad are the markets in Europe, and will that affect my investments at home?
- Is there anything the Federal Reserve or the government can do to turn this thing around?
The Dow Jones recently suffered its worst two-day decline since late 2008, deepening worries that the economy is not improving. Although investors later came back and gobbled up some bargain-basement buys on stocks, the economic news in general from the Federal Reserve, foreign markets and even China has not been good.
The Fed's plan to sell $400 billion in shorter-term securities promised to lower current mortgage rates and other loan rates, including refinance rates. The Fed hopes people and businesses will start borrowing this cheap money and pumping it into the economy. But since those rates were already historically low, it seemed unlikely a decline in current mortgage rates or refinance rates would send people charging back into the market.
And with the presidential election heating up, American consumers can only expect to hear more conflicting reports about the economy.
The Republicans are sure to hammer the Obama Administration for the high unemployment rate and the recent drop in the U.S. credit rating by Standard & Poors. The Democrats are likely to emphasize that they've done the best they can with the staggering deficits left by two foreign wars and Bush-era tax cuts. It won't be easy to say who's telling the truth.
But despite the stock market uncertainty, some economic news has been encouraging. The Conference Boards economic indicator index increased in August, and the weekly report on new jobless claims was about what the federal government expected. That's not the kind of news you get during a recession.
