The stock market is declining rapidly. Many investors are worried about their retirement accounts. The stock market has fallen nearly 20 percent since October. There are multiple reasons for the recent drop in the stock market.
President Trump levied additional tariffs on Chinese products several months ago. These tariffs were designed to increase manufacturing in the United States. However, the tariffs drastically increased the price of products for numerous retail companies. Many business leaders have called on President Trump to rescind the duties.
Earlier this year, economic growth looked strong. All sectors of the economy were thriving, and most consumers were confident about the future. As a result, many people started borrowing money. Consumer debt is at the highest point since 2008.
In recent months, economic growth has stalled. Although growth is still positive, many people feel like the declining growth rates are a sign of an impending recession. If a recession does occur, few people are financially prepared. The vast majority of people in the United States have little savings. Many financial experts are urging clients to increase their cash reserves.
Jerome Powell is the leader of the Federal Reserve. He recently signaled that the Federal Reserve would increase interest rates. During the last recession, the Federal Reserve drastically decreased interest rates to stimulate economic growth.
As interest rates rise, multiple sectors of the economy will be impacted. The housing market has been robust for many years. Higher rates make homes much more expensive for homeowners.
Some investing experts believe that now is an excellent time to purchase specific stocks. Many technology stocks have drastically decreased in price. Anyone who buys a stock right now must be prepared for extreme volatility. It is not uncommon to see massive swings in the stock market each day.
If trends continue, 2018 will be the first year since 2008 that the stock market declines in value. Since the recession, the stock market has drastically increased in value.