The Shape of Things to Come? Consider this Time Series
The shading denotes the decline of the Dow Jones around September 29th, when the TARP legislation went down the first time. Here’s the detail:
As the WSJ noted:
The Dow, which had opened sharply lower on fears of more possible bank failures, finished the day down 7%, with a 777.68 point drop to 10365.45. Losses to shares on the broader Dow Jones Wilshire 5000 index amounted, on paper, to $1.2 trillion — eclipsing the size of the proposed bailout package. The Nasdaq Stock Market finished down 9.1%.
Edelberg and Sheiner discuss the implications of a default, citing among other points a 2013 Fed study indicating a 30% stock market decline. Last week, CEA released an analysis, examining a scenario involving a stock market decline of 45%. (For comparison, the October 2008 to March 2009 decline was 22%.)