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Economics Experts In Philadelphia See Little Effect From S&P Downgrade Of US Credit

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PHILADELPHIA (CBS) - The stock market is taking a beating, but does a small investor need to worry?  We talked to local economists about that question.

Wharton professor Kent Smetters says all the concern about Friday’s credit downgrade were unnecessary.

“What we’re seeing is just the opposite of what everybody predicted.  We actually saw a good run on bonds,” he says.  “People are demanding government bonds.”

Smetters says bonds prices already reflected a certain level of risk so there won’t be the expected disaster for consumer credit.

eileen appelbaum Economics Experts In Philadelphia See Little Effect From S&P Downgrade Of US Credit

(Eileen Appelbaum. File photo)

But stock prices are another matter.

Former Temple University professor Eileen Appelbaum (right), now with the Center for Economic and Policy Research, says the downturn has nothing to do with the US economy.

“This is really due to what is happening in Italy and Spain,” she told KYW Newsradio, “and if the European Central Bank will step up to the plate, the stock market will stabilize.”

smetters Economics Experts In Philadelphia See Little Effect From S&P Downgrade Of US CreditSmetters, of the Wharton School (right), thinks the stock market is reacting to the realization that the recovery may take years.  He says investors should avoid risk, even if it means a lower return.

Related story:  Jill Schlesinger, CBS Moneywatch

On the bright side, oil prices went down today so gas prices should soon go lower.

Reported by Pat Loeb, KYW Newsradio 1060

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