US Instability Strikes Fear Of Global Recession

US Instability Strikes Fear Of Global Recession

It has been reported that top US economic analysts are concerned the country could be heading towards another financial meltdown, with markets falling substantially and growing uncertainty about the stability of the American economy.

Market experts have been keeping a close eye on the American economy as the Federal Reserve raised interest rates for the fourth time this year from 2% to 2.5%. Big investors and borrowers are concerned that this rise in interest rates could prevent borrowing and cause a dry-up of cash within the banking world.

Year To forget?

2018 has been a largely uncertain year for the American economy, with only two-quarters of slow expansion under its belt. President Trump’s tax cuts have given the economy a slight boost, but uncertainty surrounding the ongoing Mueller Investigation into Russian election meddling has only risen as more of his cabinet resign from the White House.

Furthermore, Trump’s continued trade war with China has many predicting a quicker downturn of the economy than was expected. Higher interest rates could make this decline even more significant.

It was only this week that the International Monetary Fund (IMF) warned that, once again, ‘storm clouds are gathering‘ for another global recession. With the United States being one of the biggest and most powerful economies in the world, its mishandling of complex economic issues could burst the slow bubble of growth that has been building since the early 2010s. Experts are also warning that geopolitical issues including Brexit, disagreements in the Eurozone and the slowing demand for oil could all contribute to a global recession.

2019 Prospects

Many are expecting 2019 to show a decline in growth across the major economies, influenced by political changes across the world.

The 2008 Economic Crash, the worst economic disaster since the Wall Street Crash in 1929, was largely prompted by the property market collapsing under the weight of sub-prime mortgages, losing billions of dollars and sinking many large banking firms, including Lehman Brothers. The Federal reserve spent over $350 billion bailing out the banks at the time in order to avoid an economic depression.