Global stocks fell again on Wednesday on new worries about the pace of the global economic recovery. In the U.S., the Dow Jones Industrial Average has declined more than nine percent in the second quarter, fueled in part by a drop in consumer confidence and continuing worries about the health of the global economy. But economists say speculation that the world economy could slip back into another recession is simply that - speculation.
Falling stocks and a slow recovery in the job market have put many Americans in a pessimistic mood. Consumer confidence fell sharply in June -- raising fears that a decline in consumer spending could trigger another recession.
But economist Jim Glassman at JP Morgan Chase says the worries are greatly exaggerated. "When you look at the consumer trends, consumer spending is actually pretty steady, and the job front, we will find out on Friday," he said.
That's when the monthly U.S. unemployment report comes out.
Meanwhile, doubts about the pace of recovery continues to roil global stocks. In Asia, key indexes finished the second quarter with the worst performance since the collapse of Lehman Brothers in 2008.
"Of course, the main concern is really the ongoing credit crisis in Europe. The sovereign risk -- Greece can't repay their debt even though the Central Bank and IMF announced a 750 billion euro facility that still has not restored the confidence of the financial markets," said Francis Lun, the head of Fullbright Securities in Hong Kong.
Some reports added to the pessimism, suggesting the U.S. could fall back into recession as the effects of the 800 billion dollar stimulus begins to fade.
But economist Mark Zandi says a double-dip scenario is unlikely. "I think the economy will make it through. It's going to be a bit tricky. We're going to feel uncomfortable over the next six to 12 months. As the reporter said, the benefits of the stimulus is fading, but I think there's enough good going on that we'll make it through without a recession," he said.
Speaking at a town hall meeting in Wisconsin on Wednesday President Barack Obama acknowledged the frustration many Americans feel about the economy and more importantly -- jobs. "Today, we've added private sector jobs for five months in a row. So the economy is headed in the right direction. But I know that for a lot of Americans - for Racine and a lot of other communities - it's not heading there fast enough," he said.
The much anticipated employment report coming out on Friday should give investors a clearer picture of how fast the U.S. economy is growing. Preliminary reports suggest job growth in the private sector is likely to fall short of expectations.
