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Office of News & Public Affairs

BC Expert: Stock Market

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Bob Murphy

Robert Murphy
Associate Professor of Economics
(508) 202-2295 (cell)

Professor Murphy served in the Clinton Administration as a senior economist at the Council of Economic Advisers; in that role, he served as editor of the Economic Briefing of the President of the United States.  He has also previously addressed the World Congress on National Accounts and Economic Performance Measures for Nations. Professor Murphy is a frequent commentator on the U.S. economy and how it is affected by fiscal policy. His knowledge base includes international economics and finance, budget and deficits and public debt, inflation, interest rates, unemployment, trade deficits and surpluses, exchange rates and general issues related to the value of the dollar, trade policies, international financial markets, and the oil market.


“The selloff in the U.S. stock market over the past few days reflects increased concern that headwinds from Asia facing the U.S. economy have intensified.

“Slower growth in China, as confirmed today by a six-year low for manufacturing activity, means less demand from goods from the U.S. and elsewhere.  The Chinese economy is now widely believe to be growing below the government’s official target of 7 percent—a target that itself would represent the slowest pace in 25 years.  Recent policy decisions in China and other emerging economies to devalue currencies versus the dollar will dampen U.S. exports.  Elsewhere in Asia, Japan earlier this week reported a decline in its GDP for the first quarter, indicating it has slipped back into recession, suggesting that attempts to stimulate the economy have not succeeded.

“Another factor weighing on the stock market is yesterday’s decision by the Greek prime minister to resign and call new elections for mid-September.  The governing coalition in Greece is split on whether to continue supporting the recently concluded debt deal with Europe and the IMF. New elections might solidify this support, but in the near term will increase uncertainty about whether the Greek crisis remerges this fall.

“A final factor contributing to the market rout is a growing perception that if the U.S. (and world) economies slip again into recession, policy tools are now much more limited for cushioning a downturn. Policy interest rates are near zero in most economies, central bank balance sheets have expanded enormously in the U.S., Japan, UK and Europe, and fiscal policy is hamstrung by the advocates of austerity.  So if another recession comes, markets are worried that governments may not be able to respond as flexibly.”


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Sean Hennessey
Associate Director
Office of News and Public Affairs
Boston College

(617) 552-3630 (office)
(617) 943-4323 (cell)