This time, perhaps the stock market He is Economy.
Financial markets have decreased around the world in the days when President Trump has passed on comprehensive definitions, which led to a global trade war. S & P 500 More than 10 percent decreased in two days Last week, and Violence on Monday Amid news about more definitions and rumors about the delay. The stock indicators in Asia and Europe decreased sharply.
Experts often warn that the stock market can be a misleading measure of the wider economy. Stock prices can move for a set of reasons – technological developments, transformations in consumer preferences, tax policy changes or interest rates.
Sometimes, although the markets carry an economic message – and in recent days, they were unusually speaking. Investors believe in an overwhelming majority that Mr. Trump’s tariff, and the revenge of American commercial partners, will lead to high prices, slower growth and possibly global stagnation.
Stock prices may not reflect shares drops of recession. It may also help cause one, as consumers pull the spending in response to the value of vaporizing their governor.
“If the stock market continues for a few weeks, the economic costs start to install quickly,” said Ryan Sweet, the chief American economist in Oxford Economic, but whether the decline in the stock market continues for a few weeks, and the economic costs begin: “If the decline in the stock market continues for a few weeks, the economic costs start,” if a few Days of disorders may not matter much.
The direct effects of definitions on low and medium income consumers, who tend to spend more money on food, clothes and other commodities subject to duties, who have less savings to isolate them from high prices. But the market drops will feel more severe by the higher owners, who have an impatient share of shares and other investments.
These richest families have played a decisive role in supporting spending on consumers in recent years, as low -income families have been pressured through high prices, high interest rates and slow wages growth. Now, high -ranking owners can also become more cautious while losing their value.
“Well, I will not repeat my kitchen because my kitchen budget is completely eliminated in the stock market in the past three days,” said Tara Senkler, an economist at George Washington University.
It will not be the only archaeological families affected by the decline in stock prices. The majority of Americans have shares either directly or through retirement accounts. The part that owns the shares of individual companies has increased in recent years, partly due to Meme Stock This started during the epidemic.
Mr. Sweet estimates that the “effect of wealth” – the amount that families increase, in a total, increase or reduce their spending in response to the stock market changes – is four times what it was before the epidemic. This makes the economy more vulnerable to market drops.
“It is hundreds of billions of dollars in possible spending,” he said.
The decrease in the spending of this size would extend through the US economy of $ 30 trillion. Companies have already grown more careful about employment and investment amid uncertainty about definitions and other policies. They have Mostly resisted cut functionsBut this may change rapidly if sales start to decrease.
“This is the mechanism for your tracing,” said Michael Gabin, chief American economist in Morgan Stanley. “The weakest demand among high -income families, then companies may participate in the demobilization of workers, and these workers usually strike families with low and medium income.”
The recent market movements indicate that these concerns are escalating. The shares of technology companies, auto and other companies that have global supply chains have suffered from some of the largest declines. But the losses were not limited to companies that are directly affected by the tariffs. The shares of airlines, hotel operators and other companies that provide services to consumers with available income.
“What we see is that he is hitting the major companies, it strikes small companies, it strikes everyone.”
Oil prices also decreased sharply. This indicates that investors believe that economic activity – including travel, shipping and investment in infrastructure – is likely to weaken, not only in the United States but around the world. In fact, other countries may be more difficult because exports constitute a greater share of their economies.
Mr. Gabin said: “The rest of the world enjoy a much more luxury than we are.” “It is not a great recipe for global growth. It may be likely to get a global recession from the American recession.”
Many investors are still optimistic that Mr. Trump will reconsider the tariff plans before they lead to widespread demobilization of workers or work failures. But even if he did so, it is not clear whether it is possible to retreat from complete damage – partly because after weeks of policy repercussions, corporate leaders may not be confident that the threat of customs tariffs is completely behind them.
Mr. Sweet said: “Companies have a huge number of questions and there are no many answers, and when this is the situation, they may be more comfortable in obtaining a shelter in the hideout.” “They are retreating from employment, and they retreat from investing in structures, equipment and programs.”
