Be Thankful for the Stock-Market Selloff

The meltdown on Wall Street in recent days might have an upside: It could help extend the length of the expansion.

I had three primary concerns about the extent of the equity rally of 2017 and the beginning of 2018. The first was that it could shift the Federal Reserve in a hawkish direction. The second was that it would extend beyond Wall Street to Main Street, heightening the risk that a market crash would spread through the broader economy. The third was that a selloff would derail the Fed’s interest-rate hike plans and even force it to cut rates. A more modest pace of gains would help ease these worries.

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