Almost $10 trillion in losses for US economy, GDP declining rapidly

By Al Mayadeen English
Source: Agencies
29 Sep 2022 11:41
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Extreme poverty is becoming a looming threat to the American public.

The US economy is under more threat of a sharper decline (Bloomberg via Getty)

Citing Federal Reserve data, CNBC reported on Wednesday that the steady decline in the New York Stock Exchange (NYSE) that commenced at the beginning of this year annihilated over $9 trillion in investors’ wealth, and is expected to continue - already possibly reaching the mark of $10 trillion.

Americans’ holdings of corporate equities and mutual fund shares, as demonstrated in the data report, plunged from a high of $42 trillion in January down to about $33 trillion as of June 30 but as these statistics are three months outdated, financial experts foresee losses amounting to a total between $9.5 trillion and $10 trillion, pushed by the gradual decline of stock values since July.

"The loss of stock wealth suffered to date, if sustained, will be a small, but meaningful headwind to consumer spending and economic growth in coming months,” said Mark Zandi, chief economist of Moody’s Analytics, in a statement to CNBC.

Earlier this month, the stock market witnessed its worst day in over two years after inflation data crushed investors' expectations that moderating price pressures would compel the Federal Reserve to scale down its interest-rate hike campaign. Everything from stocks and bonds to oil and gold was sold by investors. The Dow Jones Industrial Average's 30 equities all fell, as did the S&P 500's 11 sectors. Only five of the broad benchmark's stocks closed the session with an increase. Meta Platforms sank by 9.4%, BlackRock fell by 7.5%, and Boeing plummeted by 7.2%.

Despite the financial and market crises provoked by the Covid-19 pandemic, and per an Oxfam report, a whopping 573 new billionaires emerged on the market just in the span of two years - sending 160 million people into extreme poverty. According to the most recent Economic Confidence Index score by Gallup, August ratings represented the public's most pessimistic view of the economy since the Great Recession ended in early 2009, with 47% expressing pessimism with 16% describing it in good condition.

The stock index, the Dow Jones Industrial Average (DJIA), which serves as a stand-in for the status of the NYSE as a whole, suffered a hit to its value by losing one-fifth since its January 4 high of 36,799.65. The American economy was not exempt from following suit, as two consecutive quarters exhibited a decline in its pattern according to the Department of Commerce. However, notwithstanding the shape the economy is taking, the Biden administration refuses to acknowledge the situation as a recession in light of the upcoming 2022 November elections.

In July, US President Joe Biden stated, following data released by the Commerce Department: "It's no surprise that the economy is slowing down as the Federal Reserve acts to bring down inflation," Biden said after the growth data was released, "even as we face historic global challenges, we are on the right path and we will come through this transition stronger and more secure. Our job market remains historically strong."

In regards to the workforce, the unemployment rate is anticipated to increase from 3.7% to 4.4% by next year per projections by the Fed's Summary of Economic Projections while the GDP growth is expected to reach a mere 0.2% for 2022.