This week in Bidenomics: The bear-market president

President Biden talks a lot about inflation. He typically takes two tacks. One, he acknowledges it’s a serious problem for ordinary families. Two, he explains what he’s trying to do about it.

Biden almost never talks about the stock market—but maybe he should start acknowledging the pain it is causing, too. The S&P 500 index is down 24% from its peak early this year. The tech-heavy NASDAQ is down by a punishing 33% from its peak last November. Stocks rise and fall as a matter of course and don’t ordinarily warrant presidential attention. But this bear market, which worsened in September, may be casting a new layer of gloom over already dour Americans.

The driving force behind the 2022 market rout is inflation, and the Federal Reserve’s late yet urgent effort to jack up interest rates and bring inflation down. Rate hikes make borrowing more expensive, which tends to cut into spending and slow growth. Higher borrowing costs also trim corporate profits, which is one factor pushing stocks lower. Investors are also grappling with how much collateral damage the Fed may cause as it hikes rates, and the possibility of a recession that hits profits even harder.

Approved ~ Primus Pilus

LivinInTheUSA

Article URL : https://finance.yahoo.com/news/this-week-in-bidenomics-the-bear-market-president-204606630.html