EDITORIAL: Now is not time to panic

York Dispatch

The natural inclination is to panic.

Watching your life savings plummet in what seems like an instant can be frightening.

Trader Gregory Rowe works on the floor of the New York Stock Exchange recently. The market has experienced a significant drop recently.

Last week, there were a lot of very scared people here in York County during the stock market plunge. Folks saw their IRAs, 401Ks and other investments take a very serious hit.

Going into Tuesday, the S&P 500 had experienced an 8 percent drop since the near year began. And in the past eight months, the Dow Jones had decreased more than 12 percent from its all-time high in May.

Those are some terrifying numbers.

The instinctive reaction is to sell and get out of the market.

According to most economic experts, however, that would not be the right move.

That's because the underlying pillars of the U.S. economy are still in pretty decent shape. Unemployment is down and the job market is growing, as is the overall economy. The issues that caused the stock market plunge — instability in China and plummeting oil prices — left investors anxious and alarmed.

Some are fearful that another recession is on the horizon. That fear appears to be unfounded.

According to a report in Monday's York Dispatch, most experts believe that the U.S. economy is resilient and nimble enough to avoid any serious damage.

The market plunge was more of a "correction" after a long bull market and reaction to forces outside of the United States, not a harbinger of desperate economic times to come.

This appears to be a Wall Street issue, not a Main Street problem.

Yes, there are troubling signs in China, but the U.S. economy has relatively little exposure to the Chinese problems. Lower oil prices, meanwhile, should help the average U.S. consumer in the long run.

Besides, Wall Street is notoriously bad at predicting future economic activity.

As famed economist Paul Samuelson once quipped, “The stock market has forecast nine of the last five recessions.”

This is not like 2008. Major financial institutions are not failing and the housing market is not in crisis.

The market will bounce back. It always does. Investors just need to have the patience to ride out the rocky times.

A little faith in our economic system is all that is needed. We've survived the Great Depression and the Great Recession. We can survive this latest "correction."

Now is not the time to panic.