A Blast from the past: Tuesday, September 1, 1998 Testing the Wealth Effect
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By Scott Burns
Come with me to the front lines of Worry.
The latest innovation here is called "the wealth effect"--- the idea that recent
declines in stock prices will reduce the feeling of wealth and security people have,
causing them to cancel all those orders for yachts, new carpeting, and projection TVs
the size of Rhode Island. Then people will be out jobs, incomes will actually decline,
and we’ll be in a recession.
"Deep doo-doo," in the immortal words of former President George Bush.
Worse, it could be a spiraling wealth effect. You know, where a lower stock market
today begets a lower employment rate tomorrow, begetting a still lower stock market
the day after, resulting in a still lower employment rate after that, and so on until
all of us die in a conflagration of inoperative Visa cards
My suggestion: don’t believe it.
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No believe it! |
