It's the economy....

The stock market fell again today, ending an ugly week. Up to now, I have attributed most of the market's decline to a growing realization that Bush may not win. Now, I think that has been taken into account and something new is driving the market. It is beginning to look as if economic growth is beginning to slow down. The market looks six months ahead and does not like what it sees: higher oil prices, inlation from deficit spending, a worsening situation in Iraq with no end in sight, etc.

The opening on Monday might be grim. There was no little bounce at the end of the day as is often seen in down markets. Selling increased toward the close. This weekend, the stock market will be a news item. The analysts and pundits will relate a long list of bad things to explain the market—worsening employment figures, slowing retail sales, etc., etc. Over the weekend private investors will probably, on balance, decide to sell or withdraw from mutual funds.

Just as rampant enthusiasm can cause "bubbles" on the upside, market declines can feed on themselves. There is a larger chance that fear will take over and send the market down over the next few months than that optimism will send it up. There is no room for increased optimism. The market gurus have been telling everyone all this year how bright the future is.

I can't help but speculate on the political angle. If the market continues to decline and if it declines dramatically, it will become harder and harder for Bush to point to all that he has accomplished with his tax cuts. This could lead to a sharp swing downward in his poll ratings and widespread predictions that he will lose. That would drive the market down further.