Dow drop highlights 2016 risk for Clinton

Dow drop highlights 2016 risk for Clinton–47kh.,b43

Financial markets opened 2016 with a brutal drop, signaling concerns about global economic instability that could spell trouble for White House hopeful Hillary Clinton as she promises to build on President Obama’s economic legacy.

In the first trading day of 2016, the Dow Jones industrial average dropped by 450 points before closing down 275 points.

Monday’s sell-off, spurred by concerns about China’s economic slowdown and tension in the Middle East, follows a raucous end to 2015 that saw several strong swings in financial markets. And it drives worry about the strength of the global economy at a critical juncture, both economically and politically.

While the U.S. economy has grown steadily and unemployment has fallen, public dissatisfaction with the economy lingers, thanks in large part to stagnant wages and growing income inequality.

“The one thing that everybody’s been waiting for is that fulcrum where wages start to rise,” said Daniel Alpert, managing partner at Westwood Capital. “We haven’t gotten there. We’re not getting there. It’s not happening.”

“Secretary Clinton does not want to be seen as overly critical of the Obama administration, but at the same time you can’t have a tin ear if the economy is weak,” said Brian ­Gardner, senior vice president at Keefe, Bruyette & Woods. “It puts her in a slightly awkward position.”

But with Americans still not seeing much of that economic growth in their paychecks, running on those accomplishments could be a challenge. At best, it may just blunt an attack from rivals, rather than being a strong asset.

Further complicating matters is the Federal Reserve, which is trying to return to a more normal monetary policy by raising interest rates but is keen not to upend the recovery. The central bank will be closely watched throughout 2016, after it finally raised rates last month for the first time in nearly a decade. A Fed misstep could hurt the U.S. economy.

With the year just underway, some on Wall Street are making dire predictions. Blackstone’s Byron Wien predicted Monday that the stock market would be down in 2016, driven by economic struggles both in the U.S. and abroad. Wien also predicted that Clinton would win the White House.

“The second-quarter numbers, which come out around the end of the summer, those are the numbers that seem to implant in people’s heads,” said Bergsten. “People thought there was a recession and that really helped Clinton. But there was no recession at all.”

If the economy under Obama begins to struggle in 2016, it could be difficult for Clinton to capitalize on the U.S.’s strong economic progress during her husband’s presidency.

source–the hill, fred bergsten, peter schroeder, daile alpert,

 

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