Will U.S replicate 2008?
It’s hardly a decade over!!! Will there be another Lehmann Brothers collapse? The answer will be yes. Why?
The US economy under Trump is doing just fine. The president has overseen a slow but steady economic expansion. But this only benefited the wealthy Americans not the average labours. In a poll 48% of Americans believe economy is going towards bad shape. Even the GOP’s signature economic Policy achievement, the Tax Cuts and Jobs Act, did little to boost wages and business investment.
However, the economy isn’t contracting, so things could be a lot worse. And it’s possible they might get that way. Wall Street banks are already preparing for the US economy to slow down in 2019. Economists do believe the tax bill helped boost overall economic growth — for a little while, at least. The economy was growing at about 2.2 percent a year since the end of the recession in 2009, and then hit 4.2 percent in the second quarter of 2018, right after the tax cuts went into effect. The third quarter was also strong, with a 3.5 percent increase. By the end of 2018, however, annual economic growth fell to 2.6 percent.
Stock Markets and Trade War:
After Trump has become President in 2017 the stock market was started moving up and in January 2018 the DOW has breached 25,000 points and many stocks have shown good growth. The investors had also good returns for their money. But before the end of 2018 the stock markets has faded and investors lose their investments. Trump also picked stock market as a favourite tool to measure the economic growth.
Again in January 2019, the DOW reached 25,000 points and did some favour for investors. Now the investors and analysts are expecting a crash in stock markets as the markets are overvalued and the trade war which has been emerged between U.S and China. Initially, after Trump sworn in as President he promised to upend free trade, which he blamed for the loss of well-paying manufacturing jobs.
He definitely disrupted international trade, but his restrictions have done more harm than good. Over the past year, America has placed about $200 billion in tariffs on Chinese goods, in part to make Chinese products more expensive so Americans don’t buy them. The administration has also placed steep tariffs on all imported steel, angering other major US trade partners.
The idea was to level out the trade deficit with China and make China buy more US goods, but, as expected, China responded by slapping its own tariffs on American imports.
Trump’s protectionist trade agenda ended up hitting American farmers the hardest. A total of 84 farms in the Upper Midwest filed for bankruptcy between July 2017 and June 2018. Farms that produce corn, soybeans, milk, and beef were suffering due to low global demand and low prices, according to economists, and Trump’s trade war is making the problem even worse.
Bond Market and Unemployment rate:
The 10-year US bond yield has fallen below the 3-month bond yield. In simple terms, this means that long-term bonds are offering lower returns than short-term bonds and is seen as an indication of economic uncertainty. The yield inversion has raised fears that the US economy may be headed for a recession.
The US unemployment rate has been on a steady downward trend since the end of the Great Recession, dropping from 9.8 percent in January 2010 to 4.8 percent when Obama left office. Under Trump, unemployment hit a low of 3.7 percent in September, though it has started to tick up in recent months.
In September, the black unemployment rate fell to 6 percent for the first time, setting a new record that suggests progress is being made toward closing a longstanding employment gap between black and white workers. The black unemployment rate has since ticked up to 6.8 percent, but that’s still low by historical standards.