WASHINGTON (NEXSTAR) — Monday morning the Dow and Nasdaq futures plunged sharply as investors around the globe grew fearful of an economic downturn.
Bankrate Senior Economic Analyst Mark Hamrick calls the reaction “a bit of a mini panic” that is unwarranted.
The market meltdown is directly tied to last week’s disappointing July jobs report showing U.S. unemployment shot up to 4.3%, the highest it’s been since October 2021.
Hamrick says much more data must be reviewed before drawing any conclusions about a potential recession.
Other economists say the plunge is a direct result of the Federal Reserve’s refusal to bring down interest rates. Just days before the July jobs report was released, the central bank decided against an interest rate cut.
The new data could, however, foreshadow a rate cut ahead.
Chairman Jerome Powell signaled a rate cut is under consideration for their next meeting in September.
“The question will be whether the totality of the data, the evolving outlook and the balance of risks are consistent with rising confidence on inflation and maintaining a solid labor market if that test is met, a reduction in our policy rate could be on the table as soon as the next meeting in September,” said Powell.
The Trump campaign is already seizing on the bad headline. On Truth Social, Trump declared the markets are crashing and blamed his opponent Vice President Kamala Harris’ recent surge in the polls.
“This is a preview of the world markets without Donald J. Trump in the White House. None of this happens if Trump is in. Kamala and the markets don’t go together. She’ll destroy the markets. She’s in power now and look at what is happening,” wrote Trump.
Further economic volatility could complicate the Harris campaign’s economic message.
In a statement Friday, the White House said the July jobs report shows employment is growing but noted much more work needs to be done to slow inflation and bring down prices.
Hamrick says the crux of the issue has less to do with policies in Washington and more to do with economics.
