Bust follows boom under capitalism

San José, CA – The New Year is starting off much the way 2018 ended: with U.S. stocks being hammered again. On Thursday, January 3, the Dow Jones Industrial Average (DJIA) fell more than 600 points, the technology heavy NASDAQ fell more than 200, and the broad S&P 500 fell more than 60 points. All the averages fell more than 2% to put the year into the red.

Trump administration makes bad situation worse

San José, CA – On Monday, December 24, all three major stock market indices smashed the old records for declines on Christmas Eve. The Dow Jones Industrial Average (DJIA) fell more than 650 points or 2.9%, more than twice the 100 year record set back in 1918 when it fell 1.1%. The broader S&P 500 fell 2.7%, to close more than 19% from its record high, and less than 1% away from the 20% drop that would put it in bear market territory and ending an almost ten-year bull market in stocks.

Capitalism’s cycle of boom and bust continues

San José, CA – Casting a shadow on the stock market are the growing number of economic statistics that point to a recession in 2019. Almost all mainstream economic forecasters expect economic growth to slow down in 2019 as the impact of the 2018 tax cuts wear off; the forecast is for 2.4% growth, about the same as in 2017. But few predict a recession.

San José, CA – On Friday, December 21, stock prices fell again, capping the worst week on Wall Street in ten years. Typically, stock prices go up in December, in what many call a “Santa Claus rally.” But not this year. The NASDAQ stock index, which includes many big technology companies, fell 3%, to end 22% below its August high, putting it in bear market territory for only the second time in the last 20 years. The NASDAQ joined the Russell 2000, a stock index of smaller corporations, which went into bear territory earlier in the week. The headline Dow Jones Industrial Average (DJIA) of 30 large companies, and the broader S&P 500 of 500 major corporations also declined to levels just short of a bear market.

San José, CA – At 12:01 a.m. on Saturday, December 22, nine of 15 agencies of the federal government will shut down over President Trump’s demand for a wall on the U.S.-Mexico border. Almost 400,000 federal workers would be furloughed, and another 400,000 so-called essential workers will have to go to work without pay. This comes to about 40% of the 2 million federal government workers. In past shutdowns, federal workers got backpay at a cost of billions of dollars to the government. But there are millions of contractors and contract workers who will probably not be paid, right in the middle of the holiday season.

_Worst December since Great Depression _

San José, CA – On Monday, December 17, U.S. stocks continued to drop. The widely quoted Dow Jones Industrial Average (DJIA) fell more than 500 points, or 2%. The broader S&P 500 and the tech-heavy NASDAQ also fell more than 2%. All the major stock indices are now down in double digits from their record highs this year, and the Russell 2000, an index of smaller companies, is now in an official ‘bear market,’ as it fell to a level more than 20% below its all-time high. U.S. stocks are deeper in negative territory for the year and have had their worst December since 1931, during the Great Depression.

San José, CA – On Friday, December 7, the Department of Labor released its report on the job market in November. There was a net gain of 155,000 jobs, less than the predicted 200,000 and less than the average gains for the first ten months of the year. While the official unemployment rate stayed the same at 3.7%, the broadest measure of unemployment, which includes part-time workers who can’t find full-time work, ticked up to 7.6%, more than twice the official rate.

Wall Street likes the news

San José, CA – On Monday, November 26, General Motors announced that it was cutting 15,000 jobs. Their plans include closing five auto and auto parts plants in the United States and Canada. Wall Street liked the news, and GM’s stock rose almost 5%, three times as much as the broader stock market. But for thousands of GM workers, the holidays suddenly became much bleaker.

San José, CA – Stocks fell again on Friday, November 23, pulled down by the falling price of oil. The broadest major stock market index, the Standard & Poor’s 500, which measures the prices of 500 large U.S. corporations, officially entered correction territory, by closing more than 10% below its all-time high. This has been the worst week for the stocks in the S&P 500 in 80 years.

San José, CA – U.S. stocks couldn’t hold on to early gains, November 21, as their attempt to bounce after two days of large losses largely fizzled. The Dow Jones Industrial Average, which had gained more than 200 points in early going, actually ended with a tiny loss, while other averages were able to hold on to small gains of less than 1%. Despite this break from heavy losses, the U.S. stock market is off to its worst start for the third quarter (October to December) since the 2008 financial crisis.

San José, CA – On Tuesday, November 20, stocks and other financial markets staged a broad retreat. Stocks tumbled for a second day in a row, wiping out virtually the gains for 2018. The broad S&P 500 index of 500 large corporate stocks fell 1.8% and is now down 10% from its record high set in October. But the downturn went far beyond the stock market. Oil prices fell more than 6%, while corporate bonds also fell, pushing up interest rates. Bitcoin prices took another hit, falling to $4200, almost 80% down from its high less than a year ago.

San José, CA – On Friday, October 26, the U.S. stock market fell again. The broadest measure of U.S. stocks, the S&P 500, which measures the prices of 500 of the largest corporations in the United States, fell 1.7%, ending the day below where it started the year in January. One of the hardest hit stocks was Amazon, which fell almost 8% on Friday, down nearly 20% since it hit a high in September, giving the corporation a market value of $1 trillion.

San Jose, CA – On October 15, the U.S. Treasury department said that the federal government budget deficit for Fiscal Year 2018 soared 17% from the previous year, to $779 billion. This was equal to 3.9% of the Gross Domestic Product, or GDP, the official measure of total production of goods in services in the United States in a year.

San José, CA – On Wednesday and Thursday, October 10 and 11, U.S. stock markets slumped, with the widely followed Dow Jones Industrial Average or Dow down over 800 points on Wednesday and another 500 points on Thursday. While the market did recover a bit at the of trading week on Friday, with the Dow up about 250 points, uncertainty about the bull market in stocks and the ongoing economic expansion are back.

San José, CA – On Sept. 17, President Trump announced that tariffs of 10% will be slapped on $200 billion of Chinese goods starting Sept. 24. These tariffs will rise to 25% at the beginning of 2019. Trump also said that he would put tariffs on another $267 billion dollars of imports from China if China responds to his tariffs. Along with the tariffs on $50 billion of Chinese imports already in place, this would mean steep tariffs on virtually all of the $500 billion in goods that the United States buys from China.

_Tariffs on an additional $200 billion of Chinese imports includes Christmas lights _

San José, CA – While most Americans won’t have a ‘white Christmas’ this year, many of us will be looking forward to the displays of lights on many homes and businesses. Now the Trump administration’s escalating trade war with China threatens to dim this coming holiday celebrations – or at least make them more expensive.

San José, CA – U.S. stock markets fell again, June 25, as trade war worries continued to weigh on investors. The Dow Jones Industrial average fell 1.3% or more than 300 points, after regaining some ground from a 500 point sell-off earlier in the day. The NASDAQ index, which includes more stocks of high-tech companies, fell over 2%.

San José, CA – On June 19, stock markets around the world fell in reaction to U.S. President Trump’s promise to escalate the U.S. trade war with China. The Japanese Nikei index fell almost 2% along with other Asian markets. In Europe, Germany’s export-oriented economy meant its stocks were hit the hardest, with the German DAX index down more than 1%. The world sell-off ended in New York City, with the Dow Jones industrial average down more than 1%, bringing the average to below its starting point for the year.

San José, CA – On Friday, June 15, President Trump signed orders to place tariffs (taxes) on $34 billion of imports from China beginning July 6. The office of the U.S. Trade Representative (USTR) will be imposing tariffs on another $16 billion of imports from China in the near future for a total of $50 billion in imports facing 25% taxes. This represents another turnaround in trade from a few weeks ago, when Trump’s Commerce Secretary Steve Mnuchin said that the trade war was “on hold” after initial negotiation with the Chinese government, which had offered to increase purchases of U.S. goods and further open the Chinese economy to foreign investments.

San José, CA – On Friday, June 1, new U.S. tariffs of 25% on steel and 10% on aluminum imported from Canada, Mexico and the European Union (EU) went into effect. These countries supply about half of U.S. steel imports. All of the countries responded with counter-tariffs on U.S. exports that will start in a month or less. In addition, the other countries are going to be filing suit with the World Trade Organization (WTO), charging that the U.S. reason of “national security” is just a fig leaf to cover U.S. violation of WTO rules.