LUBBOCK, TX (KCBD) -
Stock markets around the world dropped today in concerns that newly re-elected President Barack Obama and the Congress will struggle to work out a budget deal.
The market dropped over 300 points, the worst one-day loss of the year.
The most critical challenge is resolving the so-called fiscal cliff, which is the combination of higher taxes and government spending cuts that will automatically take effect on January 1, 2013 unless Congress agrees on a new budget.
Dr. Ronald Gilbert, Associate Professor of Economics at Texas Tech University said several local industries here in Lubbock could be affected by the decline.
"Cotton is a major industry, education, health care, those sorts of things, so we of course are affected like the rest of the economy," said Gilbert.
Economic experts say if stocks stay low it could mean high deficits, slow growth, and a high unemployment rate among Americans.
"Even at Texas Tech, it means lower income for households, less take home pay, makes college less affordable," Gilbert said.
Contrary to popular belief, not only the rich people own stocks. More than half of the American population has stock market investments.
Even though it is a setback, Gilbert says it is not something we should be alarmed about immediately.
"The market is a powerful place. The economy is huge. We can overcome the mistakes of government, and I think we will."
After the Election Day in 2008, the stock market dropped nearly 500 points.
The Dow closed right below 13,000 points today.
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