ECU Economics expert breaks down recent stock market downfall

ECU Economics expert breaks down recent stock market downfall

ECU Economics Professor Nicolas Rupp says there is some uncertainty in the Middle East, which is causing a downfall in the U.S. stock market.

GREENVILLE, N.C. (WITN) – U.S. stocks have faced a bumpy road over the past few days as the stock market saw its biggest daily drop in nearly two years on Monday, August 5th.

ECU Economics Professor Nicolas Rupp says there is some uncertainty in the Middle East, which is causing a downfall in the U.S. stock market.

The equal weight index was down about 3.5% since August 1st. That compares to a 4.4% drop for the S&P 500, according to FactSet.

Rupp says the rising tensions with Israel are a large factor and that the Central Bank of Japan raised their interest rates, thus causing a decline in Japan’s stock market that spread to the U.S.

Rupp also told WITN some concerns are factors in the decline right here in the U.S. “Some slowing in the U.S. economy, economic weakness, some raising unemployment levels in the U.S. so there was more concerns about the U.S. economy and also U.S. Central Bank decided not to decrease interest rates.”

Though economists are expressing concerns about the possibility of a recession, Rupp says there are a few factors that typically happen.

“Recession, you need unemployment rates to be rising and so right now, we’re seeing just a slight increase in unemployment. The other concern about the weaknesses in the U.S. economy is that the economy has been relying on the U.S. consumer to keep spending and raising levels of credit card debt are a concern that consumers might slow down their spending due to mounting credit card debt,” Rupp told WITN.

Rupp says there could be some relief coming soon to look out for. Coming September, the Federal Reserve indicated they are considering they are reducing their interest rates and that should spur some economic growth—thus declining interest rates.

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