The negative effect could hit the job market if local corporations react to the dour financial news with reflexive cost-cutting moves, such as layoffs that could further affect the economy, Leamer said.
The situation hit home Monday morning when European monetary exchanges plummeted sharply, sending shock waves from New York to Glendale and Burbank.
The Dow Jones Industrial Average fell nearly 370 points Monday to finish below 10,000 points for the first time since October 2004. At one point during midday trading, the Dow fell by as much as 800 points, its biggest one-day drop, eclipsing a mark it set last week when the House rejected a proposed $700-billion bailout package for troubled financial institutions.
When Congress passed a revised version of its bill Friday, elected officials hoped the infusion of cash to banks that had taken on bad debt as a result of the collapsed housing market would sooth a troubled market.
President Bush pressed Congress to take action amid dire warnings of what would happen if his proposed bailout package was not accepted and local representatives who voted for the bill Friday said action was needed to be taken to avert further fiscal collapse.
The warnings may have contributed to nervousness on Wall Street and in the region, where anxious business leaders sought answers to the economy’s vexing problems, Leamer said.
“My concern is that all this fear from our leadership about the financial market will cause a sensible reaction from [businesses] to curtail their business plans,” he said.