By virtually all of the conventional indicators, the U.S. economy still looks strong.
Unemployment is at near-record lows, and consumer spending and retail sales are on the rise.
Moreover, unless the Fed breaks the downward spiral by cutting rates quickly, the eventual outcome could be a far deeper recession than anyone expects. During the New Economy boom of the 1990s, the rapidly expanding tech sector and the soaring stock market fed on each other. The stock market served as a prime source of funds for new tech companies, which could easily raise millions, or even billions, with IPOs. The willingness of investors to pay big bucks for public offerings also stimulated the flow of funding for startups from venture capitalists, who knew they could easily take their companies public. At the same time, the rapid pace of innovation and the flow of hot IPOs from new tech companies drove the markets higher and higher.