#Global economic meltdown 2008 driver#

Eventually, the Fed’s rate hikes should broadly bring costs down. Interest rates have risen at a historic pace, pushing mortgage rates to their highest level in more than a decade and making it harder for businesses to grow. The Federal Reserve, led by Chairman Jerome Powell, is aggressively raising rates to combat inflation - even if it risks triggering a recession. Once again, the reason behind the pullback has a lot to do with the Fed. The personal saving rate in August remained unchanged at only 3.5%, Daco said - near its lowest rate since 2008, and well below its pre-Covid level of around 9%. “The hardship caused by inflation means that consumers are dipping into their savings,” EY Parthenon Chief Economist Gregory Daco said in a note Friday. And America’s shoppers are tired.Īfter more than a year of rising prices on just about everything, with wages not keeping up, consumers have pulled back.

#Global economic meltdown 2008 driver#

1 driver of the world’s largest economy is shopping. By one estimate from Morgan Stanley, each 1% rise in the dollar index has a negative 0.5% impact on S&P 500 earnings. The dollar’s strength also creates destabilizing effects for Wall Street, as many of the S&P 500 companies do business around the world. In response, central banks that are already fighting pandemic-induced inflation wind up raising rates higher and faster to shore up the value of their own currencies. That makes it more expensive for those nations to import essential items like food and fuel. The value of the UK pound, the euro, China’s yuan and Japan’s yen, among many others, has tumbled. While a strong dollar is a nice perk for Americans traveling abroad, it creates headaches for just about everyone else. The Bank of England intervened in the bond market this week restore confidence in UK assets.