FRIDAY 10:30 AM. The graph is obvious. Three days after the reelection of Barack Obama the stock market is still reeling. The media is blaming it on European challenges and a built in cushion because so many expected Romney to win the election. Pad it as they may, the stock market is now facing the reality of the ‘fiscal cliff’ and a tax and spend president. Only gold owners are smiling today.
This is November. The fiscal cliff is the sequestration or automatic cuts that Congress agreed on that would happen if they could not find a way to stem our ever growing debt. Concerns about the impact of the fiscal cliff were highlighted Thursday in a report from the Congressional Budget Office. If fully implemented, the U.S. economy is expected to shrink by 0.5% in 2013 and the unemployment rate rise to 9.1% from 7.9%. Lower growth and higher unemployment combined with continued rising costs could put the country back into a depression.
Many middle class Americans wonder how this will affect them. Of course, everyone will feel the impact of higher goods costs. Most everyone knows someone who has struggled to find a job in this economy. More often people think the Stock Market ups and downs are only important to the wealthy. But retirement programs and 401Ks often are invested in the market and drops in market value can translate to dramatic changes in retirement plans.
Today the president will speak about his ideas to bridge this fiscal cliff. No doubt he will express hope that the Republican controlled House of Representatives will agree to his plans. Maybe the president will offer an outstretched hand rather than his snide “elections have consequences” remark of his first term. And if that happens maybe the market will react in a positive direction.
We should all be watching closely.