US ECONOMY & STOCK MARKET CRASH
Is U.S Economy going to crash?
The stock market or GDP projection or consumers spending indicates that US economy will go through a stagnation or say it is currently ongoing. While the wall street is projecting it's victory, the U.S economy is still going down.
When there is early moving in market to upwards there is also a downfall coming soon.
Fast-forward to today and the sun is still shining on the US economy. Unemployment is below 4%, inflation is sliding, consumers are still spending, and the S&P 500 rallied as much as 20% this year before cooling off recently. And the GDP is projected to grow by 1.6% in this third quarter.
If we see the market S&P is up 8% in last six months,
NASDAQ is up 14% and DOW JONES around 3%.
But the thing we are missing is these projections are too soon to claim the victory because the fast moving in these figures to upwards may lead to a tragic downfall also. May be a Looming market crash.
According to some investors like Michael Burry who predicted the 2008 stock market crash and made 100 million USD personal profits and 700 million for his investors. Now he has placed another bet of 1.5 Billion USD. Warren Buffet is also doing the same thing as his company sold shares worth 8 billion USD in the last quarter.
As of current scenario American stocks are supposed to be rebound, inflation is cooling down so the economy should be shooting up but these Ace investors don't think so cuz they are predicting a crash in economy.
A couple of factors can drag down the US economy:-
1. China because every indicators from Beijing looks bad whether it's consumer spending or factory output or export, all of these numbers are in negative and it have spillover effects on US, their treasury chief Janity Allen admitted this.
2. Banks in US as the Replubican SVB collapsed and rating agency Moody's has already downgraded 10 American banks and another agency Fitch warns the banks.
If Major banks like JP Morgan, Bank of America, CITI Bank are downgraded, the impact will be huge.
Infact a downgrade has been seen already in these three as JP shares are down by 2.7% in last 10 days, CITI Bank is down by 4% and BOA is down by 5.6%.
"To say today that we're going to have a soft landing is so premature," Michael Kantrowitz, the chief investment strategist at Piper Sandler, told. "History tells you you really can't make that assessment."
The current US economy is going through a pretty weird stage. As everyone is claiming triumph for early victory but a few can only see the upcoming disaster. Well it's a assumption only it must remain so.
Since March last year Federal Reserve is hiking it's interest rate. They've done it 10 times, the lending rates is 5% higher than it was last year. It shows a negative impact but the reality is showing opposite. The economist predicting America's GDP to grow by 5.9% in this quarter. Unemployment has dipped to 3&1/2%. Consumer spending is also increasing and retail sales hikes to 0.7% last month.
Between all these things BlackRock the biggest asset management company says it's all temporary, the US economy will remain stagnant throughout the rest year and upcoming year. There will be neither expansion nor contraction.
It's better than recession but still there will be no growth. But these are all just predictions of different investors and economists. While some are saying stagnation is great for current US economy others are saying it's a no good disaster.
Because in the short term it can be better than recession but in long term it will be more disastrous than recession.
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