The Dow Jones Industrial Average took a massive nose dive on Thursday, making it the first one we’ve experienced since January 2021, as more and more bad news concerning inflation has come out and the Federal Reserve has made an aggressive spike in the interest rate.
And yet, President Joe Biden continues to say over and over again that our country is doing just fine? What more do people need to hear in order to get the hint that this man is either a bald faced liar, experiencing dementia, or a combination of the two?
I’d say this madness has earned him a cognitive test, wouldn’t you agree?
For those who might not keep up much with financial news and happenings concerning the stock market, the Dow is an index that tracks 30 large publicly traded companies that conduct business on American exchanges.
According to a report from the Daily Wire, the Dow reached 30,000 for the first time toward the end of 2020 while former President Donald Trump was in office. Then, when Biden took over on January 2021, the Dow closed out at just a bit over 31,000 as things seemed to be bouncing back after the recession induced by COVID and the lockdowns put in place to try and stop the spread of the illness.
The Daily Wire has more details:
After steadily increasing to nearly 37,000 through 2021, the Dow has since plummeted due to several economic headaches — including record inflation rates, persistent supply chain bottlenecks, and the Russian invasion of [redacted]. On Thursday afternoon, the index sank below 29,900 — reflecting a roughly 19% plummet from its peak in early 2022.
Most recently, the Consumer Price Index (CPI) increased 8.6% year-over-year as of May, surpassing economists’ expectations. The Producer Price Index (PPI), which monitors inflation for wholesalers, increased 10.8% over the same period.
The Thursday selloff was induced by the Federal Reserve announcing that it would hike interest rates by 0.75% in the boldest monetary policy action since 1994. The central bank already increased rates by 0.5% in May — the largest such increase since 2000 — after a 0.25% rate hike from near-zero levels in March.
The reason for rate hike is to discourage more price level increases and to signal to investors that central bankers are serious about fighting against inflation. However, they do come with some rather serious side effects, such as increasing borrowing costs for both businesses and consumers. Unfortunately, this decreases economic activity.
“Overall economic activity appears to have picked up after edging down in the first quarter. Job gains have been robust in recent months, and the unemployment rate has remained low,” the Federal Open Market Committee, which is responsible for handling the Federal Reserve’s policy interventions, went on to say in a recently released statement. “Inflation remains elevated, reflecting supply and demand imbalances related to the pandemic, higher energy prices, and broader price pressures.”
“The yield curve — which tracks the relationship between bond maturity and expected interest rates — inverted earlier this week in a sign that the economy is bound for a recession. Normally, a bond with a more distant expiration will have a better interest rate — but with an inverted yield curve, short-term interest rates are higher than long-term ones, reflecting a looming rate increase in the near future,” the Daily Wire reported.
“Overall, the United States economy shrank at an annualized 1.5% pace during the first quarter of 2022, representing the most severe drop since output plummeted by 31.2% in the second quarter of 2020. The U.S. Bureau of Economic Analysis generally defines a recession as two consecutive quarters of negative growth,” the report continued.
Several polls have revealed business leaders predicting an upcoming contraction. The National Association of Manufacturers recently conducted a survey that revealed 59 percent of executives working in the sector have stated that inflationary pressures “make a recession more likely in the next 12 months.”
Well, that’s certainly not good news. But what should you expect when the federal government is doing absolutely nothing to repair the damage it has done by printing funny money like crazy during the pandemic?
More than 90 percent of those who responded to the survey revealed that higher costs for raw materials is one of their “primary business challenges” in the second quarter of the year.
If all of this financial disaster we’re seeing isn’t enough to produce a red wave this November during the midterms, what more is it going to take for the American people to open their eyes?
This story syndicated with permission from michael, Author at Trending Politics
Notice: This article may contain commentary that reflects the author's opinion.
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