The Dow Jones Industrial Average lost nearly 250 points in the first hour of trading on Wednesday morning, the day after President Barack Obama won re-election to a second term in office. News of poor economic forecasts in Europe also drove the steep decline; the European Union is now predicting that it will slide into recession.
European markets had actually greeted the Obama win with a brief rise, before economic reality set in. Growth is too slow in the U.S.–an anemic 2% at best, driven largely by third-quarter defense acquisitions–to take up the slack in the global economy. With the U.S. headed toward a fiscal cliff, and the balance of power in Washington essentially unchanged, with the president promising more tax hikes, markets see little reason for optimism.
Renewed job creation, strong retail performance in the fourth quarter, and a political solution to the long-term debt problems of the U.S. government would all combine to create a sunnier outlook. But for the moment, those goals are uncertain, and the economic outlook on the morning after Obama’s triumph looks dim for now.