Investor fears that the global economy could slip into recession are driving a wave of massive selling. rocked major stock indices Around the world on Friday.
The Dow Jones Industrial Average, S&P 500 and Nasdaq each fell more than 1.5% on Friday, with the Dow closing at its lowest level since late 2020. The S&P is down 23% from its January peak.
As Michael George reported on CBS Saturday Morning, raising interest rates to curb inflation has had ripple effects on the economy. On Friday, the president of a company called Sustainable Development Equity ended a terrible 486-point drop day on the New York Stock Exchange, continuing a terrible week.
The market is down over 5,000 points in 12 months and over 1,000 points this week. More storm clouds await, says James Wilcox, an economist at the University of California, Berkeley.
“The odds of a recession are very high, and they’re getting more likely every year, especially since the summer when the Fed was aggressive in raising rates,” he said.
The Federal Reserve’s three rate hikes in 2022 are making borrowing harder for businesses and consumers looking to grow, especially those looking to own a home. The average interest rate on a 30-year fixed mortgage has surged from 3.3% to 6.7% in the past nine months, thanks to the Federal Reserve’s rate hikes.
“It’s very difficult to know how much more mortgage rates will go up, but I think it’s still possible that other rates, car rates, credit card rates will go up. Buy a new car or be more expensive.” buy a nice car,” Wilcox said.
In all of this, White House Press Secretary Carine Jean-Pierre addressed the economy on Friday.
“That’s why we passed it, and why Democrats in Congress passed the Cut Inflation Act. By the way, Republicans didn’t support it,” she said.
The White House also notes that gasoline prices have fallen significantly over the past few months, and the job market, which remains part of a strong economy. The unemployment rate he is 3.7%.