Descent into recession?

Global stock-markets have plummeted today, with the FTSE 100 share index suffering its largest one-day drop since September 11th, 2001; losing more than 5% of its value.  The falls – which are being mirrored by rapid price drops for commodities such as oil – are being spurred by a fear of a recession in the US.

Clearly, George W. Bush’s $140 billion tax-relief package for the American economy has failed to reassure financiers; even though its explicit aim is to catalyse continued growth (but “at a slower rate”) for 2008.  These tax relief measures appear to have come too late in the day to persuade American consumers – who are already worried about troubles in the housing market – to go out and spend, spend, spend.

The falls have been so dramatic, that they can only heighten the fear that America is about to slide into recession, if it isn’t experiencing one already.  And remember: where America goes – financially speaking – the UK tends to follow.  I was sceptical at the time, but now I’m slightly more inclined to believe the prediction made in Saturday’s Independent: that a recession is just around the corner.  Oh well, at least Northern Rock’s share price is up.