STEVE INSKEEP, HOST:
And now we attempt one of the most perilous feats in journalism - reporting on the future. That's normally a bad idea, but when it comes to the economy, the future is what it's all about. People's expectations for the future, however right or wrong, influence what they do now. The lousy performance of the stock market so far this year suggest a coming recession. But a closer examination by NPR's John Ydstie suggests that doesn't seem likely.
JOHN YDSTIE, BYLINE: As the old saying goes, the stock market has predicted nine of the last five recessions. In other words, sharply falling stock markets are crying wolf about half the time. Dyke Messinger runs a small manufacturing company in Salisbury, N.C. He thinks stock investors have been overreacting during this sell-off.
DYKE MESSINGER: It is bizarre to me when we see what we believe is good core strength in the U.S. market.
YDSTIE: Messinger's market is the construction industry. His company, Powercurbers, manufactures machines that contractors use to build curbs and gutters for housing developments and commercial buildings.
MESSINGER: Everybody is a bit on pins and needles due to the changing world economy. But there's still pent-up demand for housing and commercial construction.
YDSTIE: Those sectors performed weakly in the U.S. coming out of the recession but are doing much better now. Messinger's business is actually a good reflection of the situation facing many U.S. manufacturers. He exports a lot of his machines. About 30 percent of his sales are to international customers, including oil-producing countries in the Middle East, so the plunge in oil prices has hurt his business. His international sales have fallen sharply, so he knows the global economy can hurt as growth.
MESSINGER: I know a lot of what happens in the United States depends upon what's going on in China and other countries. But if I had some spare money, I think I'd be buying U.S. stocks.
YDSTIE: Messinger says, for his company, growth in the U.S. economy will more than offset lost business abroad. Economist Sara Johnson also believes the U.S. stock market is not accurately predicting the U.S. economy in 2016.
SARA JOHNSON: I think financial markets have overreacted.
YDSTIE: Johnson is senior research director for global economics at IHS. She points to strong U.S. job growth as evidence the domestic economy remains on track despite global weakness. And she says concerns that the U.S. is vulnerable to the slow-down in Chinese growth are overblown.
JOHNSON: While it certainly is creating some turmoil in financial markets, the real economic consequences for the U.S. are limited.
YDSTIE: For one reason - total exports represent only about one-eighth of the U.S. economy, and less than 10 percent of those exports go to China. So the vast majority of U.S. economic activity is generated inside U.S. borders. And Johnson sees a positive picture for this year, helped by the deep decline in oil prices. She acknowledges that plummeting oil prices hurt the U.S. economy last year, decimating energy companies and sparking huge layoffs. But she says 2016 will be different.
JOHNSON: The U.S. is a net importer of crude oil, so the drop in prices is a substantial gain to U.S. consumers.
YDSTIE: That's been the conventional wisdom, but some economists have begun to doubt that low oil prices are a net positive for the U.S. economy. After all, because of the shale revolution, the U.S. has become the world's largest producer of oil and natural gas. That means energy price drops have a bigger negative impact on American companies and workers than before. In fact, Goldman Sachs now predicts those negatives will offset the benefits to U.S. consumers, so lower oil prices won't be a boost to the economy this year. John Ydstie, NPR News, Washington.