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Just 20 days ago, the US stock market was sitting at the height of all times. The US economy appears to be increasing at a solid pace. And a recession was nowhere to be seen.
Now, the word is apparently everywhere.
Responsible concerns are shaking the stock market. GDP forecasts are decreasing. President Donald Trump and his economic team face questions about possible recession.
It is amazing how fast the mood has turned. These investors were surprised a few months ago whether the economy was probably very strong.
The fact is that the US economy does not appear to be closer to any ascending recession. It was Growing on a steady clip At the end of last year. The first quarter is not over yet. And the Jobs Market was still in growth in January and February.
It is quick to say that the economy is suffering from recession, which is usually a deep misery due to large -scale jobs, bankruptcy and forecasts.
The previous recession was frightened, the previous location, with the benefits of Way Odoone. Remember 2022 recession frequency that includes some 99 % of the possibility of recession is shining.
Bad news economists say that despite a relatively low level, the risk of recession has really increased.
And the uncertainty about Trump’s economic agenda – especially confused about its price plans – is a major part of the problem.
“This is a very flexible economy. It can lick and continue to tickle. David Kelly, chief of the JP Morgan Asset Administration, said, but it does not like this uncertainty.
On Monday, former Treasury Secretary Larry Summers told CNN that there was a “real possibility” of recession.
“We have a real possibility of a vicious cycle where a weak economy leads to weak markets, and then weak markets lead to a weak economy,” he said in the air.
Kelly said the economy and the market are suffering from “uncertain tax” due to questions about Trump’s prices, federal spending cuts and widespread rid of federal workers.
“Right now, many business people are like deer in headlights. This is a very dangerous place.
Former New York Federal Reserve President Bill Dadley told CNN on Monday that prediction of recession is “premature” but added that the threat has certainly increased. ” Dadley accused the trade war of confusion.
“There are two effects of taxes: one, they move prices forward. And two, they reduce development, “said Dudley.” The level of uncertainty is much higher.
The summer noted that the markets rely on the forecast, but instead “surprised after the surprise”.
“The irony, irrespective of all the confusion and uncertainty about taxes and rates, is that, both cold demands have forced the business not to invest, consumers have been forced to think that they can stop them before making big promises.”
This confusion is spreading in the market.
After its worst week in six months, S&P 500 suffered a loss of about 3 % on Monday. After the record height on February 19, the benchmark index has now decreased by about 9 %.
“The stock market is losing confidence in Trump 2.0 policies,” Ed Yardy, president of Investment Advisory Yarden Research, told CNN in a phone interview. “Now everything is in danger, mostly because of the rush to establish many goals of the administration – with unannounced results.
The fear of CNN and the temptation of the greedy market was wandered on Monday in a “extreme fear” style, which is a major change in a few weeks ago.
Tech stocks are suffering from sales because investors reach dangerous corners of the market and reach defense areas like utility, health care and consumer staple.
Nes Deck fell 4 percent on Monday, which is the largest one -day lack since September 2022. The losses led by a magnificent 7, seven groups. Once unstable high growth stock. Of these, Tesla dropped 13 %, while Nodia, Apple and the alphabet lost more than 5 %.
Of course, the stock market is not a economy.
The unemployment rate is 4.1 % lower. The economy increased jobs for the 50th consecutive month in February, which is the second long time in modern history.
Yet there is a danger that the market turmoil spreads to the real economy.
Consumer confidence has already been rioting in recent months, when Americans can be included in the market riot. As a result, consumers can depress the costs – the main driver of the US economy.
The Yardi market is upset with the “effects of negative wealth” due to the continued malfunction of the market.
“Trump will have to re -consider his view that when he is experiencing revenue and breaking federal salaries, it is okay to let the market go down,” he said.
Referring to the risk of high taxes, Goldman Sex increased his recession on Friday – but not dramatic. The Wall Street Bank now sees 20 % of the possibility of recession over the next 12 months, which was more than 15 % before.
Goldman Sex economists wrote to clients in a note, “We have increased it by just a limited amount at this point because we see changes in policy as a key threat, and the White House has the option to pull back if the dangers of reduction look more serious.”
In other words, the Goldman sex is bet that if a recession looks close, Trump is blinking at rates.
But what will happen if Trump doesn’t blink?
“If the White House remains committed to its policies despite very bad data,” the Goldman Sex economists wrote, “The risk of recession will increase further. “
Another important question mark: How will the Federal Reserve respond to the fear of ongoing growth?
Former New York Fed Chief Dudley said that Trump’s prices have simultaneously raised prices and binding the feed, damaging the economy.
This can have the effect to paralyze the feed, and prevent officials from moving interest rates higher or less.
“If the feed has been closed for many, several months, I will not be surprised,” he said, adding that the rate decline in May will be “very soon” even though something is predicting it on Wall Street.
In recent years, the US economy has proved to be very flexible.
It fought the four decades to fight the Fed war against Kovide 19 variations, supply chain chaos, inflation and inflation.
But now it is clearly facing a new test, running in Washington through a riot in Washington.
CNN’s Brian Mina cooperated in reporting.
