How will the stock market affect the economy

In swings reminiscent of the crazy days of late 2008 and early 2009, the stock market has gyrated wildly this week. For whatever reason, we saw swings of nearly 1000 points on the Dow in less than an hour. The market closed lower today and all gains for the year were wiped out this week. Of course, every pundit and market commentator knows exactly why this happened -- Greece, jobs, oil spills, you name it! It never fails to amaze me that these folks never know ahead of time where the market is going, but they all know exactly at the close of the day why it traded the way it did. I will leave the explanation for why the market moved as it did this week to the usual purveyors of BS on that topic. I am more concerned with the effect that this last week may have on the economy as a whole.

At the beginning of the recession, the public saw and heard constant reports about how the market was melting down. Wild swings and ever lower prices were the initial announcement of the severe recession that we are just now getting over. Millions last their jobs. Millions more saw their incomes cut. Economic tensions increased greatly with the net effect of shutting down consumer spending. People became tentative about making that purchase of a car or a television. People began saving more and paying down existing debt. The total effect was to further slow the economy.

Well we now have just had another major market upset. The commentators are all talking about melt down in Greece and how it may spread. We see riots from Europe on TV. We hear that the Wall Street folks are all greedy with no consideration except making another buck for themselves. In short, things are looking grim. and, to make matters worse, we have seen the efforts by Obama and the Obamacrats to get the economy moving and we know that the Obamacrats have failed miserably in that effort. so what will the likely outcome of this week be? I am afraid that we may see another downturn in consumer spending with the net effect that it will slow or stop any recovery from the recession. Remember, not all consumers have to hold up their spending for there to be an effect. If only 5% of purchases are put off, there will be a noticeable and immediate effect on the economy.

If there are more weeks of market upset, this may all feed on itself and the recession may indeed be a double dipper. Let's hope that things settle down and that my fears are unfounded. Only time will tell.