GlobalData TS Lombard: Perkins Vs Beamish
Trump Blinks: Back to All-Time Highs?
Mar 25, 2025
Dario Perkins, an economist at TS Lombard, and Freya Beamish, also an economist at TS Lombard, dive deep into the effects of stock market fluctuations on potential recessions. They tackle pressing questions about whether market downturns can trigger economic slumps and discuss the Fed's ability to adjust rates amid tariffs. The duo examines how U.S. political dynamics may impact European economies, particularly Germany's stimulus on inflation and growth, while highlighting resilience among high-income earners in these turbulent times.
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Quick takeaways
- The stock market's current decline may amplify existing economic issues rather than directly causing a recession, as historical comparisons show modest impacts on consumer behavior.
- The Federal Reserve's ability to cut interest rates in the face of impending tariffs remains uncertain, potentially complicating fiscal management amid evolving inflation dynamics.
Deep dives
Impact of Stock Market Declines on Recession Risks
Concerns have arisen regarding the potential for stock market declines to trigger a recession. However, the current situation shows only a modest drop in US markets, which is not substantial enough to ignite a significant economic downturn. Historical comparisons to the 2000s housing market indicate that the stock market does not create the same wealth effects that heavily influence consumer behavior and spending. Instead, the stock market is seen as amplifying existing economic issues, most likely driven by factors such as tariffs and inflation, rather than acting as a primary cause of a recession.
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