The U.S. economy is about to burst:
When someone says there is an economic “bubble,” it means there is an overinflation of value in a specific sector of the economy. The stock market has seen similar bubbles t in the late 1920s, internet companies in the ‘90s and the housing market of the mid-2000s.
Like a real bubble, these sectors snowball and can become quite large, but the slightest mistake can make the whole thing burst.
The ramifications of these bursts can be seen throughout our history and all around us today. The Great Depression was the single worst economic period in modern American history.
The dot-com bubble caused thousands of people to lose their jobs, and the effects of the Great Recession of 2008 are still being felt by millions of Americans today.
Over the past couple of years, bubbles have been growing all over the American economy. In March of 2020, the federal reserve drastically decreased its interest rates to entice individuals and companies back to the market in an attempt to save what was then an economy in freefall.
This decision helped the economy in the short term, allowing people to borrow money interest-free and for the stock market to reach its highest values eve.
However, in an attempt to curb the highest inflation rates in over 30 years, the FED will now be increasing their interest rates to recoup the money they were bleeding due to their low-interest rates.
The announcement of these changes caused a bucking in the market, causing the DOW to drop a thousand points before ticking back up into the green.
More speculative assets like cryptocurrency are typically the first to crash before more traditional sectors. After the FED’s announcement, Bitcoin lost 130 billion dollars in value.
People will feel many tangible effects in their lives due to this change.
The process of taking out federal loans will now be more expensive, and mortgage payments will also increase. Both of these things happened during the recession of 2008, which led to around ten million Americans losing their homes.
While it is difficult to estimate to what degree these changes will replicate prior crashes, we know the devastating result they can have on long-term growth.
Many of the millions of people affected by the 2008 crash still have not returned to a better financial standing than before the recession, and a new one would affect them the worst.
In the wake of our most recent economic crises, we have seen a marked increase in levels of depression, drug overdoses and suicides. Much of our current political climate, the divisiveness and partisanship, can also be traced to the most recent financial crash.
The economic policies and factors that lead us into these situations are complex and challenging to understand.
However, having a basic knowledge of the entities involved is very helpful for staving off any confusion that might arise. When the bubble bursts, we will know who was holding the needle.
Thousands of jobs will return to the Midwest:
If you have been in the market for a new vehicle, you may have noticed that new cars have disappeared, and used cars are going to cost you an arm and a leg. This phenomenon is due in no small part to the current global supply chain crisis.
Not only are the raw material required for our vehicles in short order, but the microchips that control the computers in our cars are in even shorter supply.
These chips, called “semiconductors,” are one of the most critical pieces of technology in the world right now. Scientists use these versatile tiny chips in a plethora of electronic systems, including but not exclusive to cars, healthcare machinery, household appliances and so much more.
Most semiconductors are being produced and used in China currently. While that may have larger geopolitical implications for the future, it means less access to all devices mentioned above. This lack of access is causing a real strain on the American consumer.
Two large technology companies have invested in domestic efforts to give more access to semiconductors and other necessary technological products to curb this shortage.
Intel is investing 20 billion dollars into a new facility in Ohio after the state offered them two billion dollars in incentives.
Similarly, General Motors is investing seven billion dollars into multiple facilities in Michigan. These facilities will employ 3000 Ohioans and 4000 Michiganders.
On top of that, new jobs such as these have a ripple effect in their communities, on average creating three jobs elsewhere for every one factory job.
The tens of thousands of predominantly union jobs will be a big boon to their communities and should slightly ease the market strain in years to come.
Both Ohio and Michigan were two states hit hardest by the exodus of manufacturing jobs to other parts of the world.
While these thousands of new jobs are a drop in the bucket compared to the millions lost over the past 30 years, it is a significant first step in returning work lost to these regions.
