Mr Michael Mussa, the director of research at the IMF, believes that what happens to the Dow Jones is one of the wildcard effects on the world economy. Several US economists have questioned whether the US consumer boom can continue. They also point to Wall Street as a key indicator because equities now account for 25 per cent of total household assets in America - a record high. The doomsayers point to a fall in savings across America and record indebtness there, which means US households can ill-afford a rise in interest rates. However, one optimistic economist, Mr Dick Berner, a senior economist with Morgan Stanley, believes consumer health in America is well balanced.
Consumers thus can absorb setbacks in income, interest rates or equity prices.
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