The economic shock that didn't happen

Washington

"A BIG adverse surprise - like the election of Donald Trump in the US - would likely cause the stock market to crash and plunge the world into recession," predicted Simon Johnson, the renowned MIT economist and a senior fellow at the Peterson Institute for International Economics a few days before the US presidential election.

"Investors in the stock market currently regard a Trump presidency as a relatively low-probability development," noted Dr Johnson, who is also the founder of the leading economic blog Baseline Scenario. "But, while the precise consequences of bad policies are always hard to predict, if investors are wrong and Trump wins, we should expect a big markdown in expected future earnings for a wide range of stocks - and a likely crash in the broader market," he warned in a commentary titled "The Consequences of a Trump Shock".