New York Times opinion writer and economist Paul Krugman predicted early Wednesday morning that the stock market will “never” recover from Donald Trump’s presidential victory, only to be proven spectacularly wrong in less than a day. Instead of collapsing, the Dow Jones Industrial Average surged to an all-time high shortly before the closing bell.
Futures markets imploded Tuesday night as soon as it became apparent Trump was likely to win. At their nadir, futures for the Dow Jones Industrial Average had dropped 750 points.
At that point, Krugman chose to release a blog post in which he predicted these jitters represented a new permanent reality in the U.S. economy.
“It really does now look like President Donald J. Trump, and markets are plunging. When might we expect them to recover?” Krugman said in his post. “If the question is when markets will recover, a first-pass answer is never.”
“We are very probably looking at a global recession, with no end in sight,” he added. “I suppose we could get lucky somehow. But on economics, as on everything else, a terrible thing has just happened.”
But Krugman’s forecast that the markets would “never” recover took just nine hours to be proven totally wrong. Come Wednesday morning, the fever had almost entirely broken in the U.S. Instead of dropping by 10 percent or more, as some predicted, the Dow, Nasdaq, and S&P 500 all rose by more than a percent. Later in the day, the Dow briefly surged above its all-time closing high, before ending the day just a few points below it. The Dow finished the day up about 257 points overall.
The rapid whiplash was similar to the response to the Brexit referendum in the United Kingdom last summer. British markets originally swooned as some experts predicted economic devastation, but within a week they had recovered and surged to new highs.
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