More economic gloom, but Wall Street gets a 236-point boost
2/24/2009NEW YORK Just when things were looking even worse in the economy consumer confidence in free fall and home prices dropping faster came some good news: Wall Street bolted higher on a regulator s prediction that the recession may end this year.
The Dow Jones industrials finished up 236 points Tuesday after Federal Reserve Chairman Ben Bernanke told Congress there is a reasonable prospect that 2010 will be a recovery year, provided credit flows normally and financial markets work.
But those are far from sure things, and Bernanke said the economy was suffering a severe contraction. A fresh batch of bad economic data backed him up.
The Conference Board said its consumer confidence index, which stood at about 37 last month, plummeted to 25 in February, easily the worst ever. The index has been published since 1967 and just a year ago stood at 76.
Even in an abysmal economy, the dive in confidence was stunning. Economists say people s increasing worries about job cuts and their dwindling net worth could lead to even further cutbacks in spending.
This reflects the catastrophic collapse of confidence in the economy in the stock market, in the banking system and to some extent with the elected officials, said Bernard Baumohl, chief global economist at the Economic Outlook Group.
He said Americans are realizing that even though they have a new president who pushed through a massive economic stimulus package, nothing is going to change in the near term, and that s pretty depressing.
For example, Dan Walpole, an elementary school teacher in Rochester, N.Y., said that while he dropped $1,000 on a personal computer in December, he won t be spending that kind of money again anytime soon.
I m faithful there s light at the end of the tunnel, but I feel like we re not seeing the light yet, he said. There s got to be a way out of this.