By Steve Huffman
Salisbury Post
Paul Fisher, chairman of F&M Bank, said the recent downturn in the economy needs to be looked at from the proper perspective.
“Is the sky going to fall?” Fisher asked. “No. Are things going to be tough for awhile? Yes.”
The Dow Jones dropped almost 300 points Wednesday before rallying for a slight gain for the day. Still, the Dow is down in the range of 12,000 points after having topped 14,000 points last fall.
Fisher and other financial experts say a continuation of the turbulent times is to be expected, with the bottom probably not yet reached.
“I’ve told my people, it’s a normal process,” Fisher said of the drop that’s threatening to turn into a recession. “It’s not pretty, but it’s a normal part of the financial process.”
Statistics bear that out.
According to Citigroup, the United States has experienced nine recessions over the past 55 years.
The last recession occurred in 2001 and the low point for the S&P 500 at that time took place on Sept. 21, 2001. In the six months (though March 21, 2002) that followed, the S&P gained 20.4 percent.
Fisher said a similar bounce-back is likely this go-round once the markets bottom out.
“The good thing about a recession,” he said, “is that a recovery typically follows fairly quickly.”
Fisher blamed the recent economic downturn on a number of factors:
– The number of American jobs that have gone overseas;
– Over-spending by consumers at Christmas leaving many drowning in credit card debt and interest;
– A housing market that has fallen on hard times of late and;
– Skyrocketing gas prices.
“All these points prove stressful to the market,” Fisher said. “We just seem to have recognized them all at the same time.”
He said a recession is recognized as two consecutive quarters of negative economic growth, and noted that the country has yet to reach that point.
Fisher said he’s not sure if a full-fledged recession is en route, but said there’s a possibility it’ll happen. Often, he said, a recession’s arrival is something of a self-fulfilling prophecy.
Fisher compared an approaching recession to a man who gets out of bed one morning and tells himself over and over how bad he feels.
“If you tell yourself something like that 10 times or so, eventually you’re going to start believing it,” Fisher said.
He noted that the NASDAQ market is down about 22 percent from last fall’s high, and said the Dow has dropped approximately 15 percent.
Fisher said that for those who peruse the stock markets on a daily basis, the recent downturn can be good news.
“There are great bargains out there today,” he said. “We may fall a little lower before everything is stabilized, but the time to make money is when the market is down.”
Fisher said he spoke to members of his staff recently about the downturn, and reminded them that the bad times ó as well as the good times ó are to be expected.
“Americans are notorious for not saving enough and spending too much,” Fisher said. “We have to stop every so often and pay the piper.”
Contact Steve Huffman at 704-797-4222 or shuffman@salisburypost.com.