By Andrew Edwards Staff Writer
Posted: 08/04/2011 06:09:49 PM PDT

The Dow Jones industrial average fell more than 500 points Thursday, continuing a two-week plummet in stock prices that has coincided with the federal government’s last-minute dodge of a default on the national debt, a series of bad economic news and Europe’s ongoing debt crisis.

“My personal view is that the economy was never really as strong as the stock market was pretending it was,” Claremont economist Dwight Johnston said. “And the economy’s going to labor along as it has.”

“Laboring on,” may mean the United States will not sink into a double-dip recession, but the pace of economic recovery may remain stuck in the painfully slow pace that has been evident since the Great Recession officially ended in June 2009.

Formerly with WesCorp Credit Union in San Dimas, Johnston now has a private practice as a consultant and commentator.

In his opinion, Federal Reserve Chairman Ben Bernanke’s 2010 attempt to stimulate the U.S. economy through a bond-buying policy known as quantitative easing merely created a “sugar high” in which speculators had extra cash to push prices up.

Others, however, credit Bernanke’s move with helping the U.S. economy avoid a repeat recession.

The Fed has lately indicated it does not have plans to implement another round of monetary stimulus and the new focus on deficit reduction in Washington means Congress is not likely to try to pump money into the economy.

Thursday’s sell-off signified the Dow Jones’ worst fall since the fall of 2008 and the ninth-steepest decline in the index’s history. Losing 512.76 points, the Dow rested at 11,383.68 points and the decline eliminated all gains that had been achieved so far this year.

The Dow Jones measures the average price of the nation’s 30 largest companies. Its precipitous fall on Thursday follows other dismal economic news.

Gross Domestic Product, the measure of all goods and services produced within the United States, grew by only 1.3 percent during this year’s second quarter, the Commerce Department reported one week ago.

From May to June, consumer spending fell for the first time since September 2009.

Another pair of reports released this week showed a decline in durable goods orders and slow growth within the service industry.

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