Another recession in the US-bad or worse
24th October: The US stock market reacted positively to the predictions that the economy heading into another recession.
US stocks react positively–Believe it or not, but it’s true that the US stock market gained 15 percent in a short span of 13 days on hearing the projections by the ECRI(Economic Cycle Research Institute) that another financial slowdown will engulf the US economy shortly. The Index went up to 1,238 on 21st October from 1,074 on 4th October 2011. It’s a prediction only and it might go wrong, says a stock market analyst, Jon Markman, while talking about the recent report by the ECRI.
The official spokesperson of ECRI Laksman Achuthan has stated that the economic situation is heading towards a worse.
Stock market trends add strength to ECRI’s prediction--Meanwhile, Achuthan has reaffirmed the imminent round of recession in the US saying the rise in the stocks confirms ECRI’s predictions.
Earlier, way back in 2001, ECRI had made similar predictions about the oncoming recession and the stock market had reacted in a positive manner at that time too, by making a rise of 14 percent followed by a downfall of one-third in the course of following one and a half year.
And exactly seven years later, stock market went up by ten percent in two months time followed by a decline of 42 percent in the next nine months period. The ECRI had predicted a recession in 2008 too. Going by the earlier trends, a decline in the stock market could begin anytime soon with the market losing around 40 percent in the period of a year.
Factors pointing towards another recession--Looking around the world, there seem to be no indicators of any significant recovery on the economic horizon.
According to Eduardo Martinez from Moody Analytics, there is no clear sign of improvement in consumer confidence in the coming times as job market remain grim. Many homeowners in the US are feeling the pinch of recession.
They admit of shifting to modest homes and adapting to lesser living standards in the wake of losses in their businesses and no respite in the coming times too.
Sales are going down leading to low purchasing power with people. Businesses are being cut down to lower levels with large cuts in employees. All these factors signal to the prediction that the recession is not over yet.