Economists: Market Troubles Could Grow

Two well-known economists in the state believe today’s major stock market dive could be a sign of significant troubles for the U.S. economy. At this morning’s opening bell on Wall Street, the Dow Jones Industrial Average fell more than 1,000 points. At midday, it has since gained back much of what was lost, which University of Indianapolis Associate Professor of Finance Matt Will says indicates a massive overreaction. Center for Business and Economic Research at Ball State University Director Mike Hicks pins the plunge on China’s market collapse and says it is "a very, very delicate time for the world economy."

China, the world’s second-largest economy, experienced a market collapse late last week fueled by turmoil in its housing market and currency devaluation.

Hicks says issues in China and other Asian nations, coupled with weakness in the European Union will be a drag on the U.S. economy. "A significant international economic slowdown seems inevitable," Hicks says. "We should expect recessions in several dozen large nations in the coming months." Hicks says two of the four major U.S. recession indicators (retail sales and industrial production) have "clearly slowed in recent months."

Will says a drop in the U.S. was expected, analysts just didn’t know when. He says today’s performance will have a domino effect throughout the economy, including interest rates and oil prices.