As a retired business prof, keeping a weather eye on the economy is second nature, although my specialty wasn't finance. CNBC reports that, as a result of today's trading, the stock market is now officially in bear market territory.
When a major index like the Dow declines at least 20% it signals a "bear market." Here is some of what they note:
The S&P 500 notched a new closing low for 2022 and the Dow Jones Industrial Average slipped into a bear market as interest rates surged and turmoil rocked global currencies.
The Dow dropped 329.60 points, or 1.11%, to 29,260.81 — accelerating losses in the final moments of trading. The 30-stock index is down about 20.4% from its Jan. 4 closing high.
The down market has political ramifications but most importantly is a leading indicator of recession. Some 70% of bear markets are followed by a recession.
If it happens, a recession is going to hurt real people who lose jobs or home equity. It will increase government spending while it decreases government revenues.
Afterthought: When the market declines 20% it isn't far-fetched to think of it as the collective commercial wealth of the U.S. having lost one dollar in five. Kind reader, that is a BIG hit.
