Wyoming, avoiding a country recession so far
By
Published 1-25-2008
Wyoming may be safe from Monday’s stock market plunge and interest rate cut that caused many investors to pull out of financial investments, according to a University of Wyoming professor.
In Wyoming, where the economy is still holding strong, economics and finance professor Sherrill Shaffer said he believes Wyoming will stay out of a national recession that will hurt many other states’ economies.
Shaffer is not new the world of the Federal Reserve. He has extensive experience with the United States Federal Reserve, including eight years working in New York at the Federal Reserve and nine years serving as a Federal Reserve officer in Philadelphia. Shaffer also had first-hand experience working with Fed Chairman Ben Bernanke during his time in New York.
Shaffer said he believes if the Fed had looked at Wyoming’s market, it wouldn’t have made an interest rate cut on Monday after the stock market plunged.
“The stock market plunge is having a direct effect on the US economy more than the dollar, but the economy will be the reason the dollar is weakening,” Shaffer said.
Last Thursday, the Dow dropped 300 points, or 2 percent, which as well as several other market indicators, Shaffer explained. “The three reasons for this is, one, new housing construction is the slowest its been in 16 years. Two, a decrease in manufacturing, and three, reduction in consumer spending,” Fed Chairman Bernanke said in a press release.
While small drops in the market will not heavily affect the economy, sustained and continual drops can damage investment, job prospects and economic growth.
“On Monday, investors reacted to last week’s stock market plunge that resulted in another market fall,” Shaffer said. “The Fed decided to cut interest rates to stimulate economic growth after the market plummet.”
One problem with cutting interest rates, Shaffer explained, is that banks chose not lower interest rates because that only covers half of a bank’s cost, and banks still have to compete for deposits in the long run.
“Wyoming’s economy is solid,” Shaffer explained. “The Wyoming economy relies on energy, which is keeping the state on an even keel at the moment. The market plunge and interest rate cut is affecting everyone, but some more than others.
The lack of diversity in Wyoming jobs may help the state stay out of the recession longer.
Wyoming falls under the Kansas City Federal Bank range, and Shaffer encouraged anyone more interested in Federal Reserve activity to visit the Fed Web site at www.federalreserve.gov.
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