The Economy: Are even worse times to come?

Mike Davis, finance lecturer in SMU’s Cox School of Business, responds to Monday's (Aug 8) 634-point drop in the stock market:

“I remain convinced that the short term impact of the S&P downgrade will be minimal, but today's (Monday's) dramatic slide in the market certainly raises the specter of even worse times to come," Davis said. 

"The problem is not the downgrade per se, but rather the anxiety the downgrade seems to have created.  I suspect that sometime later this week the market will decide that the sky is not falling.  But that is not to predict that later this week the market will decide that skies are sunny and blue,” he said.

Davis specializes in the intersection of government and business. An expert in economic theory, he has researched topics ranging from how to measure the value of publicly funded sports facilities to the question of why politicians lie. He is a frequent commentator on the Texas and national economies, including financial markets, unemployment and the impact of economic stimulus.

Tom Fomby, professor and chair of the Department of Economics in SMU's Dedman College, says the stock market fluxuations may be a little scary but the overall state of the economy is not that bad:

"Relatively speaking, the U.S. economy doesn’t look that bad," Fomby said.

"China’s growth is slowing, subject to a stronger labor movement, and inflation is creeping up there.  India’s economy has slowed and is having to deal with belligerent neighbors and rigid social classes.  Japan’s economic malaise continues into its second decade. The European Union is shackled with heavy debt and facing possible dissolution. 

"Of which country would you like to be a resident for the next 10 years?" he said.

Fomby's research interests include econometrics, business/economic forecasting and financial economics.

News Media Contacts:

Mike Davis
Cox School of Business
214-768-2632
mldavis@cox.smu.edu 

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