Market Collapse Worst Since '08Experts Fear Recession Could Be On the Way
All investment gains made in 2011 have been negated, experts say.
"We were starting to see credit loosen slightly, with credit card originations rising again in the first half of 2011 after 3 years of steady decline," says Aite financial-services and fraud analyst Julie McNelley. "However, in the face of the steady stream of bad news coming from the economic indicators, I think we will see a return to the same level of caution that marked 2009 and 2010, with respect to consumer credit. Americans are still concerned about the high rate of unemployment and have reduced their spending again in anticipation of another recession."
Thursday's stock plunge is the worst the Dow has seen since Sept. 29, 2008, when stocks dropped 778 points - two weeks after the fall of Lehman Brothers. It marked the largest single-day point-loss in history.
Market values estimated at being worth $1.2 trillion disappeared that day. From a percentage basis, the 2008 dip resulted in a 7 percent slide for the Dow and an 8.8 percent dip for the S&P 500. Those declines paled when compared with the market crash of Oct. 19, 1987, when the Dow dropped 508 points (22.6 percent), and international stocks suffered greater losses.
Impact on Fraud PreventionReduced consumer spending, "combined with the government's forced austerity" could push the global economy back into recession, McNelley adds. But during a time when cybercrime is growing at an ever-increasing rate, she doesn't expect investments in fraud prevention to be affected by the caving market.
"Fraud tends to be countercyclical, and the need for fraud-prevention tools increases during times of recession," McNelley says. "That doesn't mean that they'll necessarily see increased spend, but it does mean that they will not see the chopping block quite as quickly as some other types of spending initiatives."