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Stock Market Could Have Worst December Since Great Depression

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The stock market is the primary investing choice for millions of people around the world. Over the past decade, the stock market has nearly tripled in value. Anyone who purchased stocks in 2008 made a tremendous profit. However, the stock market has declined by almost eight percent in December. Some economists are worried that the recent stock market plunge is a critical warning sign for the economy. Others believe that the recent decline will correct itself in a few months.

Interest Rates

The Federal Reserve sets interest rates for the United States. In recent months, the Federal Reserve has noted that interest rates will increase. Higher rates generally correlate with lower economic growth. People who have a lot of debt struggle when interest rates are high.

Higher interest rates could also discourage people from borrowing more money. Many young people already choose to rent an apartment due to high housing costs. With increasing interest rates, owning a home will become even more expensive than in recent years.

Trade Issues

Global trade is a significant boost to economic growth. The United States and China have the two largest economies in the world. Both of these nations are in a trade conflict with one another. The United States recently announced a substantial tariff on various Chinese imports. In response, the Chinese government put taxes on agricultural products from the United States.

Many farmers in the United States are struggling to survive. The Chinese tariffs caused the price of various crops to plunge. Although President Trump approved emergency financial aid for farmers, most people in the industry feel like the financial aid is not enough.

Other Issues

Another issue causing the stock market to decline is falling economic growth. Many nations in Europe have no economic growth. The United States currently has a strong economy, but many people worry that the trade dispute could impact growth in 2019. Consumer debt levels are also at the highest level since 2008. If the economy does have problems, few people have money saved to survive an economic crisis.

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