PhillyInc: Market wobbles mean markets are working

Posted: June 15, 2013

I freely admit that I'm a worrywart.

While most people are concerned when the stock market plunges, I expend an equal amount of hand-wringing energy when it defies gravity for too long.

It might be the result of hearing one too many times the oft-repeated caution that "if something sounds too good to be true, it probably is."

So I am probably one of the few people who was happy this week to see the Dow Jones industrial average experience its first three-day losing streak in 2013. Or to watch the air go out of Japan's Nikkei, which has lost 21 percent of its value since hitting its 2013 high in May.

To me, it meant that the markets - where prices can go down as well as up - are working, even if it also suggests a certain nervousness on the part of investors as we head into summer, a season that has not been kind to them during the last few years.

Of course, financial markets are only one piece of the wider economy. And pessimism about the U.S. economy has been hard to replace with optimism since the 18-month recession ended in June 2009.

On Thursday, IHS Global Insight chief economist Nariman Behravesh described the global economy as being "stuck in a soft recovery."

The phrase conjures up the image of a hospital patient, encased in gauze and bandages, immobilized in a Sleep Number bed. His trauma is over, but the healing goes on and on.

The trouble is that each nation can be seen as a patient, and the one wrapped in red, white, and blue is further along in his recovery than any from the united states of Europe. In fact, the U.S. and Asian economies are likely to be the engines of growth for the rest of 2013 and 2014, Behravesh said Thursday on a webcast.

IHS Global Insight, an economic- forecasting firm, is calling for the U.S. economy to grow at a rate of 3 percent to 3.5 percent next year. That may not as giddy as China's 7.8 percent economic growth, but then Behravesh is far more nervous about export and manufacturing trends in China than Washington's finger-pointing over sequestration's spending cuts and tax increases.

"China is the one we worry about quite a bit," Behravesh said in describing the world's second-largest economy as wobbly. "We have to brace ourselves for slower growth in China than we've been used to."

The United States won't be immune should China continue to decelerate. But Behravesh sees the U.S. energy boom, rising housing market, and improved employment picture as paving the way for 3 percent GDP growth by the end of 2013.

Growth like that would go a long way to aiding the household financial recovery of more Americans than those who worry about the ups and downs of the Dow.

Contact Mike Armstrong

at 215-854-2980 or, or follow on Twitter @PhillyInc. Read his blog, "PhillyInc," at

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