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Stock market volatility: Dow jumps on jobs report, plunges, then rises again

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“The overarching message is that we will skirt a recession,” he says, “unless we get nailed by something off our radar screen.”

However, some other economists think it might be too early to rule out an economic downturn. One of those is Nigel Gault, chief economist at IHS Global Insight in Lexington, Mass. who raised his probability of a recession from 33 percent to 40 percent on Friday.

“The economy is running pretty close to stall speed,” he explains. “When you are that weak, you run the risk of a downward spiral of confidence and activity. It does not take much of a shock to go from stall speed to outright recession.”

Although Mr. Gault says it was a relief to get a better jobs report in July, he thinks the August numbers are likely to be worse since they will reflect the uncertainty that built up during the debate over raising the debt ceiling.

“I would be surprised if we sustain the uptrend,” says Gault.

In Washington, the White House reaction was somewhat predictable. In a statement on Friday, Austan Goolsbee, chairman of the Council of Economic Advisors, called for bipartisan action in a number of areas such as extending the payroll tax cut, which expires this year, and extending unemployment insurance benefits.

On the opposite side of the political fence, in a statement, House Speaker John Boehner said the July jobs numbers show “Washington spending, taxing and regulating is devastating our economy.”

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