Mark down March 3, 2025. That was the day Wall Street finally realized that US President Donald Trump was serious about tariffs. On Monday, the S&P 500 fell nearly 2 percent as Trump confirmed what we at the Atlantic Council predicted in February—that the tariffs on Canada and Mexico were not mere threats, but actually likely to be implemented. The stock markets continued to fall on Tuesday as investors processed the news.
No. That assumes the US cannot operate on a deficit. It can and will. We don’t “fund” tax cuts unless someone responsible is overseeing the budget.
Not to mention, every billionaire has their money in the market somehow, they don’t have Scrooge McDuck gold piles. Inflation and market losses erode their money just like it erodes ours. Perhaps even more.
COVID resulted in a marked recession for the global economy, and the US was no exception. But people still had money and spent it regularly, so it didn’t freefall the entire time and at times had rallies. The US stock market is mostly run by a series of competing trading algorithms with tight guardrails these days, for better and for worse. Generally though it does mean that modern nose-dives rarely result in true crashes.
There wasn’t up and downs during Covid. There was a big dip at the beginning followed by a huge increase, lasting well into 2022, despite all the measures, recession and GDP going down. What reduced the index was the increase in interest rates.
The financial markets are strongly detached from the real economy.