Stock market’s potential in reflecting country’s economy gets doubtful

Ben Bernanke, Chairman, Federal Reserve said congress should consider the option of a fiscal package as the economy is yet to come up in a healthy shape. The Government cleared in the current month a relief package valued at $700 billion. A similar package provided in February this year gave most couples and individuals amounts ranging from $600-$1,200 as tax rebate checks. This came as part of yet another package, valued at $168 billion.

The cause for planning another package is the possibility of further job cuts by companies. Markets are dealing with tight credit situations, so the revenues of companies are shrinking, compelling them to save whatever costs they can. One of the measures they are heading for is ‘lay-off’. Considering that the unemployment rate already is 6.1% and can soar up to 7.5% in next year, the authorities are readying for anything that might be needed to free the cash-strapped people. Consumer-spending accounts for two-thirds of economic growth. So, it is of immense importance to have the investors believe in the strength of country’s financial fundamentals. However, the recent events have really made it tough to bring back the confidence.