Pricing Analytics. Photo: Shutterstock.com

The Dow Jones Industrial Average's plunge sent investors scrambling Friday, as fears over the spread of the Coronavirus contributed to the biggest downturn since the market collapse of 2008.

But experts say look beyond stock-market volatility for more long-term indicators—a trove of economic signposts among court-administration data.

And there's good news: The latest numbers point to a recovery.

"The economy most definitely affects what you see in the courts," said Zachary Cohle, an assistant teaching professor of economics at Quinnipiac University School of Law. "If you have an economy in a free fall, you will see a lot more people acting desperately."

Crimes such as robbery, for example, are likely to increase during a recession, Cohle said. And tough economic times bring a spike in foreclosures and collections on the civil court side.

But the caseload and type of cases now making their way through Connecticut Superior Court leave economists and court watchers optimistic.

One major indicator—debt-collection litigation—dropped to 12,518 cases for the 2019 fiscal year, which ran from July 1, 2018 to June 30, 2019. That tally was the lowest in nearly two decades, according to Connecticut Superior Court statistics, which showed about 13,000 to 15,000 cases pending each year from 2000 to 2007. When the recession hit, collections litigation shot to more than 20,000 cases annually for the four-year period between 2008 and 2012.

The same is true for foreclosures. At the recession's peak from fiscal year 2008 to 2010, more than 20,000 foreclosure lawsuits hit the Superior Court docket each year. Half that many cases landed at the latest count, with 9,852 foreclosure cases filed during fiscal year 2019—the only year in nearly a decade with fewer than 10,000 complaints.

"At this point in time, the economy is doing well," said Joseph Greelish, director of performance, management, quality assurance and judicial branch statistics for the Superior Court. "The bubble has burst, and the pending caseloads in many areas in the courts have stabilized because of the time lapsed since the recession. During the recession, the courts got buried with the sheer volume of cases. It takes time to work that volume through the system."

Boom-time suits

It's not only the downturns that trigger tell-tale litigation.

An upswing could also lead to crowded dockets, said Murtha Cullina partner Mark DeGiacomo.

"You will see business and commercial litigation increase when the economy is good," said DeGiacomo, a head of the firm's litigation department, and a Chapter 7 and Chapter 11 bankruptcy trustee. "You will see companies suing each other when people are building more and there is more business growth. There are always disputes ending up in court."

Contracts litigation edged upward, for instance, rising more than 16% to 14,366 disposed cases in fiscal year 2019, compared to 12,046 suits one year earlier.

The court data suggests—and experts agree—the economy is rebounding, but will it stay strong?

That depends, Cohle said.

"It's a guessing game on how long this great economy will last," he said, pointing to two major uncertainties: the 2020 presidential election and the Coronavirus, which has already sent the stock-market into a spiral.

A prolonged slowdown in East Asia will affect businesses across the globe, but Cohle said initiatives under Presidents Barack Obama and Donald Trump have made the U.S. economy strong enough to withstand a setback.  He said Obama's implementation of the Affordable Care Act, for instance, created more disposable income by lowering healthcare premiums, while Trump's tax cuts further strengthened the economy.

"While I think a slowdown is imminent, it will not be a recession," Cohle said. "I think we have very capable leaders of both parties. And I think there is a lot going on that is right with the economy. Even if a slow down occurs, we will bounce back."

Read more:

Coronavirus, Election Jitters Have Law Firm Leaders Pondering a Downturn