The United States is going through a very big health crisis and the whole economy has been severely hit. The outlook of the US economy does not look impressive and now economists are predicting that the US economy might plunge into an economic crisis. We have had a historic economic expansion for the last 10 years and this has come to an end because of the current global economic meltdown and panic. The hit on the American economy has been so big and now this is being reflected in the real GDP, employment, consumer consumption and in the industrial production. It is projected that the united states GDP will falter in the first quarter of the year and probably throughout the year. Firms like the Deutsche Bank, JPMorgan, Goldman Sachs and the Bank of America all expecting the US economy to have the worst year in many decades. If the health crisis continues, we will end up in an economic crisis that will be bigger than what we had in 2008. Right now many companies are suspending their operations and this is being reflected in the labor market where the jobless claims are skyrocketing every day.
The subject of the economic collapse of late become synonymous with leading media outlets clearly indicating an impending financial disaster evidenced by the worst stock market performance since the Great Depression in 1930. The poor performance in the stock market has been marked with increased volatility in stock prices and termed as the most unfavorable Christmas Eve in Wall Street. To make the economic situation even worse, most economic analyst including Mark Jolley is pessimistic that the situation will still get worse in the coming year as the situation is only at the first half of the global equity bear market.
The ailing economic situation has occurred within a brief period as in 2017; the stock market was at its best only to get worse in 2018 after the global economy took a new turn putting investors with their investments at stake. The financial crisis linked to the bear market is not only being witnessed in the US alone but in many stock markets across the globe which even started declining way before the situation was felt in the US.
The stock market performance in December has been termed as the worst performance of U.S stocks since the Great Depression in 1930. The dramatic decline in stock exchange has been evidenced by two key stock indexes: Dow Jones Industrial Average and the S&P 500 which closed at 7.6% and 7.8%. The significant decline of the two benchmark U.S. stock indexes has led the Russel 2000 to close in the bear market territory, a phenomenon that has greatly stunned economic analysists as well as worry investors across the country. In early October 2018, the Dow Jones average reached an all-time high of 26, 951.81 but dropped more than 3300 points in less than two months to close at 23, 592.98 on Monday with a high probability of an even worse decline.
In the past, the U.S stocks have always ended the year on a high a situation usually referred to as” Santa rally” but this year looks different attributed to a rapid decline in stock’s price. With close to two weeks remaining to mark the end of December, the situation is most likely to worsen indicated the Russell 2000 which stands at 20.6% from highs. The Russell 2000 is a crucial indicator of the movement of the Dow and S&P 500. A high Russell 2000 value points to a falling Dow and the S&P 500.