With trillions of dollars wiped off global markets, the impact extends beyond stock exchanges into the broader economy. Here's why the effects have a much quicker transmission process into our everyday lives than they once did.
What happens on Wall Street, the heart of the US financial markets, has real impacts for so-called Main Street America.Financial markets are often skittish, swinging between extreme optimism and outright panic — a phenomenon we've witnessed in dramatic fashion in the past few weeks.The first is that stock market gains are built upon a wall of worry. And the other is that stocks go up by the stairs and down by the fireman's pole.
The message is that there's no need to worry, everything will work out just fine in the end, and that the current meltdown is just wealthy traders chucking a tantrum."On Saturday morning, I nearly gagged on my bagel listening to a CNN interview with Peter Navarro. Australia's superannuation savings have grown to $4.2 trillion. And between them, our big super funds own about a quarter of everything listed on the ASX.There's a phenomenon economists call the "wealth effect" — when we feel wealthy, we spend. When things turn ugly, we snap the wallets shut.Tariffs to drive more rate cuts in Australia
Lower spending, businesses going broke, workers being laid off — if the trend becomes entrenched, we end up in recession.
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