Stocks plummeted on Monday after President Donald Trump warned of a “period of transition” for the United States economy as a result of his tariff policies aimed at bringing manufacturing back to America.
All major indices tumbled on Monday, with the S&amp;P 500 dropping 2.8%, the Dow Jones falling 2%, and the Nasdaq plunging more than 4%, per the AP.
The whiplash of <a href="https://apnews.com/article/stocks-markets-economy-tariffs-trump-rates-174603e75feb9d5cca96c08817e0c7c2" target="_blank" rel="noopener">news</a> in recent weeks regarding tariffs has had the stock market in a state of confusion, as “the main measure of the U.S. stock market is on track for a seventh swing of more than 1%, up or down, in the last eight days,” per the AP.
Last week, Trump slapped 25% tariffs on imports from Mexico and Canada, only to instantly exempt the vast majority of imported goods just two days later following a call with the Mexican president. He also doubled a blanket tariff on goods from China to 20%.
China retaliated with new tariffs of 10% to 15% targeting United States farm products such as chicken and soybeans, per the BBC.
In response to Trump&#8217;s actions, Ontario Premier Doug Ford implemented a 25% surcharge on electricity exports to the United States, a move expected to impact 1.5 million homes and businesses across Minnesota, Michigan, and New York.
Economist Mohamed El-Erian <a href="https://www.bbc.com/news/articles/cz61nn99eg1o" target="_blank" rel="noopener">told</a> the BBC that markets likely underestimated how far Trump was willing to go with tariffs and are now facing that reality.
&#8220;There is a period of transition because what we&#8217;re doing is very big. We&#8217;re bringing wealth back to America,&#8221; Trump told Fox News over the weekend when asked about recession concerns, adding, &#8220;It takes a little time.&#8221;
Former United States Commerce Department official Frank Lavin echoed this sentiment, telling the BBC that while he believes the trade war is unlikely to escalate out of control, tariffs will still create an &#8220;extra burden on the U.S. economy.&#8221;
Despite market turbulence, economists at Goldman Sachs still predict 1.7% economic growth by year&#8217;s end, though this represents a downward revision from earlier 2.2% forecasts.
The market decline has hit previous Wall Street favorites particularly hard, with Nvidia falling 5.4% today to bring its year-to-date loss to 20% and Elon Musk&#8217;s Tesla tumbling 14.2%, deepening its 2025 losses to more than 40%.

NYSE Opens After Days Of Losses Due To Tariffs On Mexico And Canada

U.S. Stocks Plunge As Trump Warns Of Economic ‘Transition’ Period

Donald Trump

Economy

Politics

Recession

Stock Market

Tariffs

Trade War

Commerce Secretary Howard Lutnick tried to alleviate consumer fears over the weekend about the economic forecast for the U.S., saying that he does not see a recession on the horizon after President Donald Trump declined to rule it out.
Lutnick made the remarks during a Sunday interview on NBC News&#8217; &#8220;Meet The Press&#8221; with Kristen Welker when asked about major banks predicting a likely U.S. recession within the next 12 months.
&#8220;Should Americans brace for a recession?&#8221; she asked.
&#8220;Absolutely not,&#8221; Lutnick responded. &#8220;Anybody who bets against Donald Trump — it&#8217;s like the same people who thought Donald Trump wasn&#8217;t a winner a year ago — Donald Trump is a winner. He&#8217;s going to win for the American people. That&#8217;s just the way it&#8217;s going to be.&#8221;
&#8220;There&#8217;s going to be no recession in America,&#8221; he continued. &#8220;What there&#8217;s going to be is global tariffs are going to come down because President Trump has said, &#8216;You want to charge us 100%? We&#8217;re going to charge you 100%.&#8217; You know what they say? They say, &#8216;No, no, no, no, no, don&#8217;t charge us 100%. We&#8217;ll bring ours down.'&#8221;
&#8220;We&#8217;ll unleash America out to the world,&#8221; he added. &#8220;Grow our economy in a way we&#8217;ve never grown before. You are going to see over the next two years the greatest set of growth coming from America as Americans. You saw it, 1.3 trillion of new investment coming into America that – think of all those jobs, and remember, each trillion of investment in America is 1% of growth GDP. So, Donald Trump is bringing growth to America. I would never bet on recession. No chance.&#8221;
In a recent interview with Fox News, Trump was asked about a possible recession.
&#8220;I hate to predict things like that,&#8221; Trump responded. &#8220;There is a period of transition, because what we&#8217;re going is very big. We&#8217;re bringing wealth back to America. That&#8217;s a big thing. And there are always periods of, it takes a little time. It takes a little time, but I think it should be great for us.&#8221;
WATCH:
<blockquote class="twitter-tweet">
Commerce Secretary <a href="https://twitter.com/howardlutnick?ref_src=twsrc%5Etfw">@howardlutnick</a>: Global tariffs are going to come down and we&#8217;re &#8220;going to grow our economy in a way we&#8217;ve never grown before. You are going to see in the next two years the greatest set of growth coming from America.&#8221; <a href="https://t.co/UXT6aZQoWB">pic.twitter.com/UXT6aZQoWB</a>
— Rapid Response 47 (@RapidResponse47) <a href="https://twitter.com/RapidResponse47/status/1898730298830946510?ref_src=twsrc%5Etfw">March 9, 2025</a></blockquote>

Secretary of Commerce Howard Lutnick

Howard Lutnick: ‘There’s Going To Be No Recession In America’

Howard Lutnick

The U.S. market got off to a rocky start on Monday, with the Dow plunging more than 1,000 points as global markets dropped amid growing concerns about a U.S. recession. 
The Dow Jones Industrial Average <a href="https://www.cnbc.com/2024/08/04/stock-market-today-live-updates.html" target="_blank" rel="noopener">dropped</a> by as much as 1092 points Monday morning and was hovering around a 2.5% drop by 10:43 am EST. The NASDAQ fell by as much as 4.1%, while the S&amp;P 500 dropped by as much as 3.3%. The U.S. market collapse followed markets around the world, from Asia to Europe, with Japan’s Nikkei 225 dropping more than 12%. 
The struggles followed a <a href="https://www.dailywire.com/news/unemployment-rate-reaches-highest-point-in-nearly-3-years">report</a> from the Bureau of Labor Statistics showing that U.S. unemployment in July reached its highest point since October 2021. The report showed that unemployment rose to 4.3% while just 114,000 non-farm jobs were added last month, far less than the 185,000 expected by analysts. 
<a href="http://www.amiracist.com/" target="_blank" rel="noopener" data-saferedirecturl="https://www.google.com/url?q=http://www.amiracist.com/&amp;source=gmail&amp;ust=1722954638989000&amp;usg=AOvVaw2h4_GXX2w1UYpx8R3FKqzi">WATCH THE TRAILER FOR &#8216;AM I RACIST?&#8217; — A MATT WALSH COMEDY ON DEI</a>
“The market was whistling past the graveyard. I think people were basically lulled into a sense of security, yet the market itself was very vulnerable to correction — and the weaker than expected economic and employment data provided that catalyst for correction,” CFRA Research chief investment strategist Sam Stovall <a href="https://www.cnbc.com/2024/08/04/stock-market-today-live-updates.html" target="_blank" rel="noopener">said</a>. 
Stocks in tech companies and artificial intelligence have seen some of the steepest drops. On the S&amp;P 500, the tech industry<a href="https://www.marketwatch.com/livecoverage/stock-market-today-s-p-500-nasdaq-futures-dive-as-buffett-dumps-apple-yen-soars?mod=home-page" target="_blank" rel="noopener"> was</a> down by around 4%, while real estate was down more than 1%. 
Both the S&amp;P 500 and the NASDAQ Composite are reportedly on track for their worst August in more than two decades, according to Market Watch. Over the past three days, S&amp;P has been down 6.4%, and NASDAQ has been down 8.58%. Both are tracking for the worst August since 2002. 
The Wall Street Journal <a href="https://www.wsj.com/livecoverage/stock-market-today-dow-sp500-nasdaq-live-08-05-2024" target="_blank" rel="noopener">reported</a> that Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla combined lost around $753 billion in market capitalization as of Monday morning. 
JP Morgan analysts now <a href="https://finance.yahoo.com/news/analysts-weigh-market-selloff-090011912.html" target="_blank" rel="noopener">predict</a> a 50-50 chance of a recession, while Goldman Sachs <a href="https://www.barrons.com/articles/fed-goldman-recession-rates-16bf36fc">believes</a> there is a 25% chance of recession in the next year. 
<a href="https://www.dailywire.com/show/scamala-kamala-harris-unmasked" target="_blank" rel="noopener">WATCH BEN SHAPIRO’S ‘SCAMALA: KAMALA HARRIS UNMASKED’ ON DAILYWIRE+</a>
The market crashes have triggered comments from former President Donald Trump, who said that the Biden-Harris administration was to blame for the collapse. 
“Of course there is a massive market downturn. Kamala is even worse than Crooked Joe. Markets will NEVER accept the Radical Left Lunatic that DESTROYED San Francisco and California, as a whole,” Trump posted on Truth Social. “Next move, THE GREAT DEPRESSION OF 2024! You can’t play games with MARKETS. KAMALA CRASH!!!”

Dow Plunges Over 1000 Points As Markets Continue Sell Off

Dow Drops More Than 1,000 Points As Global Markets Plunge Amid Recession Fears

Business

Economics

U.S. Politics

Former President Donald Trump ripped into President Joe Biden on Sunday as stocks around the world dropped amid recession concerns following a dismal jobs report in the United States.  
On Monday, Japan’s Nikkei 225 dropped more than 12%, Germany’s DAX dropped 2.3%, France’s CAC fell 1.9%, and London&#8217;s FTSE 100 dropped 1.5%, a three-month low. The drops come as there are growing concerns over an economic recession in the United States. 
CNBC reported that the Nikkei 225’s drop was the worst for the market since Wall Street’s 1987 Black Monday crash. Paired with a 5.8% fall on Friday, it was<a href="https://apnews.com/article/stocks-markets-nikkei-economy-c6240977e9482bf7207abc53b2a11e58" target="_blank" rel="noopener"> reportedly</a> the worst two-day period for the Nikkei 225 ever. 
Stocks also dropped in the United States, with the NASDAQ 100 Futures falling 4.41%, the Dow Jones Futures 2.10%, and the S&amp;P 500 Futures more than 300%. 
Trump weighed in on the plunging stock markets in a Truth Social post on Sunday night, saying that poor American leadership was causing the problems. 
“STOCK MARKETS CRASHING. I TOLD YOU SO!!! KAMALA DOESN’T HAVE A CLUE. BIDEN IS SOUND ASLEEP. ALL CAUSED BY INEPT U.S. LEADERSHIP!” he <a href="https://truthsocial.com/@realDonaldTrump/posts/112907208577621142" target="_blank" rel="noopener">posted</a>. 
Trump has been a harsh critic of Biden&#8217;s economic policies, frequently pointing to the inflation that has plagued his presidency.
Investors appear to be reacting to a Friday <a href="https://www.dailywire.com/news/unemployment-rate-reaches-highest-point-in-nearly-3-years" target="_blank" rel="noopener">report</a> from the Bureau of Labor Statistics showing that U.S. unemployment in July reached its highest point since October 2021. The report showed that unemployment rose to 4.3% while just 114,000 non-farm jobs were added last month, far less than the 185,000 expected by analysts. 
Analysts with banking and research company Evercore also pointed to the potential recession indicators. 
“With the soft employment report, the NASDAQ correction, the plunge in bond yields, and the plunge in commodity prices, it’s possible we’re seeing recession signals coming home to roost. In any event, this week, bad news was bad news for the stock market.”
<a href="http://www.amiracist.com/" target="_blank" rel="noopener" data-saferedirecturl="https://www.google.com/url?q=http://www.amiracist.com/&amp;source=gmail&amp;ust=1722702091491000&amp;usg=AOvVaw3dzILUu8JkHbwoxyGwS0qT">WATCH THE TRAILER FOR ‘AM I RACIST?’ — A MATT WALSH COMEDY ON DEI</a>
Victoria Greene, chief investment officer at G Squared Private Wealth, told CNBC that there was a &#8220;lot of bad news getting price in.&#8221;
&#8220;It&#8217;s painful,&#8221; she said. &#8220;I think there&#8217;s a lot being absorbed that happened over the weekend between Berkshire cutting Apple&#8230;you had the Japan sell-off&#8230; you have the yen spike and the end of that carry trade.&#8221;
JP Morgan analysts now <a href="https://finance.yahoo.com/news/analysts-weigh-market-selloff-090011912.html" target="_blank" rel="noopener">predict</a> a 50-50 chance of a recession as the 10-year Treasury yield fell five basis points.

US-RUSSIA-PRISONERS

Trump Blasts ‘Inept’ Biden As Global Stocks Crash Amid Fears Of U.S. Recession

Joe Biden

House Minority Leader <a href="https://www.dailywire.com/topic/hakeem-jeffries" target="_blank" rel="noopener">Hakeem Jeffries</a> (D-NY) claimed on Wednesday that <a href="https://www.dailywire.com/topic/house-republicans" target="_blank" rel="noopener">House Republicans</a> want to induce a <a href="http://dailywire.com/topic/recession" target="_blank" rel="noopener">recession</a> amid <a href="http://dailywire.com/topic/debt-ceiling" target="_blank" rel="noopener">debt ceiling</a> negotiations with the <a href="http://dailywire.com/topic/biden-administration" target="_blank" rel="noopener">White House</a> so that former President <a href="https://www.dailywire.com/topic/donald-trump" target="_blank" rel="noopener">Donald Trump</a> has better election odds next year.
The debt ceiling, a statute established by <a href="http://dailywire.com/topic/congress" target="_blank" rel="noopener">Congress</a> that prevents the government from spending beyond a predetermined <a href="http://dailywire.com/topic/national-debt" target="_blank" rel="noopener">national debt</a> limit of $31.4 trillion, exceeded the threshold earlier this year. Republicans want to link an increase in the debt limit with spending caps, while Democrats say they prefer separate processes for debt limit negotiations and budget reforms, a debate which occurs even as the government nears <a href="https://www.dailywire.com/news/yellen-says-nation-could-face-debt-default-in-less-than-three-weeks" target="_blank" rel="noopener">default</a> as soon as the first day of June.
Jeffries advanced his theory in a press <a href="https://www.youtube.com/watch?v=F4pAvuQ_i8g" target="_blank" rel="noopener">conference</a> alongside other lawmakers. “They have rejected every single reasonable proposal that the Biden administration has put on the table, which leads many of us to draw the conclusion that at the end of the day, what the House Republicans want is a dangerous default,” he commented. “They want to crash the economy, they want to trigger a job-killing recession, because they believe that it will improve their electoral prospects for the insurrection-in-chief, who is going to be their nominee.”
Democratic officials have indeed contended in recent weeks that Republicans are engaged in brinkmanship as they call for spending reforms in addition to a temporary increase in the debt limit. House Republicans have called for a <a href="https://www.dailywire.com/news/gop-led-house-passes-mccarthys-plan-to-raise-debt-limit" target="_blank" rel="noopener">freeze</a> in spending at fiscal year 2022 levels with 1% annual increases for the next decade along with an increased debt limit.
Jeffries interpreted the move as a desire to either “extract deep, painful cuts that will hurt the health, the safety, or the well-being of everyday Americans,” or otherwise “crash the economy, default on our debt, and trigger a painful recession.”
House Minority Whip Katherine Clark (D-CT) added in the press conference that Republicans do not “care about spending” since they increased the debt ceiling three times under the Trump administration. “They care what ends up in the pockets of the wealthy and the well-connected,” she continued. “The American people are watching, and they know House Republicans are responsible for this manufactured, very dangerous crisis.”
The accusations occur as House Speaker Kevin McCarthy (R-CA) continues to hold discussions with President Joe Biden over possible compromises on budget reforms. McCarthy <a href="https://www.dailywire.com/news/mccarthy-tells-house-republicans-he-is-nowhere-near-debt-ceiling-deal-with-biden-reports" target="_blank" rel="noopener">asked</a> fellow Republicans to “hang with me on the debt limit” since he and Biden are “nowhere near a deal yet,” while Biden characterized the most recent discussions as “productive” and affirmed that “the only way to move forward is in good faith toward a bipartisan agreement.”
McCarthy has repeatedly <a href="https://www.speaker.gov/reasonable-republicans-and-default-democrats/" target="_blank" rel="noopener">noted</a> that Biden waited more than three months to resume debt limit negotiations since the discussions launched in early February, meaning that the current proximity to the possible default deadline was largely avoidable.
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Fitch Ratings, considered one of the three most influential credit rating agencies in the nation, <a href="https://www.dailywire.com/news/top-rating-agencies-threaten-u-s-with-credit-downgrade-over-debt-limit-chaos-even-if-a-deal-is-made" target="_blank" rel="noopener">announced</a> in an outlook on Wednesday that the AAA rating currently held by the United States could be reconsidered because of “increased political partisanship that is hindering reaching a resolution to raise or suspend the debt limit.” Morningstar, another rating agency, said in a similar outlook that “the prospect of repeated debt ceiling standoffs in a polarized political environment” could induce a determination that the nation is no longer worthy of a AAA rating “even if Congress ends up increasing the debt ceiling” before the first day of June.

Hakeem Jeffries

House Democrat Leader Claims Republicans ‘Want To Crash The Economy’ So Trump Will Be Elected

Hakeem Jeffries Claims House Republicans 'Want To Crash The Economy' So Trump Will Be Elected

Biden Administration

Congress

Debt Ceiling

American households currently have nearly $17.1 trillion in consumer debt, with <a href="http://dailywire.com/topic/economy" target="_blank" rel="noopener">balances</a> standing $2.9 trillion higher than before the lockdown-induced <a href="http://dailywire.com/topic/recession" target="_blank" rel="noopener">recession</a>, according to <a href="https://www.newyorkfed.org/newsevents/news/research/2023/20230515" target="_blank" rel="noopener">data</a> released on Monday from the <a href="http://dailywire.com/topic/federal-reserve" target="_blank" rel="noopener">Federal Reserve</a> Bank of New York.
Household debt in the first quarter of 2023 increased $1.2 trillion from the first quarter of 2022. Mortgage debt, typically the largest category of consumer loans maintained by households, now surpasses $12.0 trillion, a phenomenon that comes as the elevated interest rate environment forces prospective homebuyers to assume considerably higher mortgage rates. Student and automotive debt are each $1.6 trillion, while credit card debt neared $1.0 trillion.
Shares of mortgage debt in serious delinquency doubled from 0.3% to 0.6% over the past year, while automobile debt in serious delinquency rose from 1.6% to 2.3%, and credit card debt in serious delinquency rose from 3.0% to 4.6%.
Mortgage debt, which rose $864 billion over the past year, composed 71.7% of the overall household debt increase. Automobile debt rose $93 billion, and credit card debt rose $145 billion, marking 7.7% and 12.0% shares of the broader debt increase, while student loan debt was comparatively flat.
High mortgage rates, caused by actions from the Federal Reserve meant to combat inflation, have significantly decreased affordability for potential homebuyers in recent months. The 30-year fixed mortgage rate was below 3% in the two years after the lockdowns, according to <a href="https://fred.stlouisfed.org/series/MORTGAGE30US" target="_blank" rel="noopener">data</a> from government-backed mortgage company Freddie Mac, but the rate has risen to 6.4% as of last week, with the increases coming after the Federal Reserve hiked interest rates.
“The pandemic boom in purchase originations was driven by many factors: low mortgage rates, strong household balance sheets, and an increased demand for housing,” analysts from the Federal Reserve said in an <a href="https://libertystreeteconomics.newyorkfed.org/2023/05/the-great-pandemic-mortgage-refinance-boom/" target="_blank" rel="noopener">analysis</a>. “Homeowners who refinanced in 2020 and 2021 benefitted from historically low interest rates and will be enjoying low financing costs for decades ­to come.”
Median home sale prices increased from $322,600 in the second quarter of 2020 to $467,700 in the fourth quarter of 2022, according to <a href="https://fred.stlouisfed.org/series/MSPUS" target="_blank" rel="noopener">data</a> from the Department of Housing and Urban Development, followed by a moderate decline to $436,800 in the fourth quarter of 2023. Lower home prices in recent months come as a result of the high mortgage rates, which apply downward pressure on demand as families delay new home purchases.
Wage increases have failed to keep pace with inflation over the past two years, pressing consumers to finance more of their household expenditures with debt. The average age of cars and light-duty trucks on American roads has reached record levels as buyers likewise delay new purchases over elevated price levels and interest rates, according to a <a href="https://www.dailywire.com/news/americans-delay-buying-new-cars-as-long-as-possible-to-avoid-high-prices" target="_blank" rel="noopener">report</a> from S&amp;P Global.
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Americans are more pessimistic about their finances than at any time since the Great Recession: half of the respondents in a February <a href="https://www.dailywire.com/news/more-americans-say-they-are-worse-off-financially-than-any-other-time-since-the-great-recession" target="_blank" rel="noopener">survey</a> from Gallup said they are “financially worse off” compared to one year ago, while low-income Americans were the most likely to say they have less robust finances since last year.
Economic growth declined to a 1.1% annualized rate in the first quarter, marking a significant decrease as economic headwinds slow recovery from the recession and the interest rate hikes decrease consumer demand, according to an <a href="https://www.dailywire.com/news/american-economic-growth-slows-to-1-1-in-first-quarter" target="_blank" rel="noopener">estimate</a> from the Bureau of Economic Analysis.

Household Debt

American Consumer Debt Hits Record Level, Rises Nearly $3 Trillion Since Lockdowns

American Consumer Debt Hits Record Level

Federal Reserve

Inflation

U.S.

<a href="http://dailywire.com/topic/stock-market" target="_blank" rel="noopener">Shares</a> for PacWest plummeted on Thursday after the <a href="http://dailywire.com/topic/banks" target="_blank" rel="noopener">bank</a> revealed that deposits fell considerably last week amid broader <a href="http://dailywire.com/topic/economy" target="_blank" rel="noopener">concerns</a> with the financial sector.
PacWest, which is based in Beverly Hills, California, and also serves clients in Arizona, Utah, and Texas, witnessed deposits fall 17% between the end of December and the end of March, from $34.0 billion to $28.0 billion, according to a first quarter earnings <a href="https://www.pacwestbancorp.com/news-market-data/news/news-details/2023/PacWest-Bancorp-Announces-Results-for-the-First-Quarter-2023/default.aspx#:~:text=March%2031%2C%202023-,ADJUSTED%20EARNINGS,the%20first%20quarter%20of%202023." target="_blank" rel="noopener">report</a> from the company. Another securities <a href="https://www.sec.gov/ix?doc=/Archives/edgar/data/1102112/000162828023017382/pacw-20230331.htm" target="_blank" rel="noopener">release</a> published on Thursday indicated that deposits declined another 9.5% last week, with most of the decreases occurring after news stories on May 4 and May 5 discussed the company’s troubles.
The document noted, however, that the bank maintains immediately available liquidity of $15.0 billion, far exceeding the $5.2 billion in uninsured deposits held at the financial institution.
News of the robust coverage ratio nevertheless failed to prevent investor concerns over the declining deposits: shares for PacWest tumbled more than 25% on Thursday as of the early afternoon, trading at $4.49 relative to $6.08 at market close on Wednesday. Stock prices for the company have therefore dropped more than 83% from the $26.68 seen on March 8, the day before the financial sector tumult.
The renewed pressure on PacWest came in the days after the <a href="https://www.dailywire.com/news/jpmorgan-chase-the-nations-largest-bank-acquires-first-republic-bank-after-government-takeover" target="_blank" rel="noopener">implosion</a> of First Republic Bank, a development which occurred weeks after Silicon Valley Bank and Signature Bank similarly collapsed, as account holders with balances above the Federal Deposit Insurance Corporation threshold at the three medium-sized banks rushed to withdraw their funds.
PacWest said in a <a href="https://www.pacwestbancorp.com/news-market-data/news/news-details/2023/Pacific-Western-Bank-Issues-Update/default.aspx" target="_blank" rel="noopener">statement</a> on May 4 that the company “has not experienced out-of-the-ordinary deposit flows following the sale of First Republic Bank and other news.”
Federal Reserve Chair Jerome Powell insisted at a press <a href="https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20230503.pdf" target="_blank" rel="noopener">conference</a> last week that the banking system is “sound and resilient” even after the volatility in early March and the collapse of First Republic Bank. “We are committed to learning the right lessons from this episode and will work to prevent events like these from happening again,” he commented.
Interest rate hikes from the Federal Reserve contributed to the substantial losses incurred by Silicon Valley Bank as executives sold a long-term bond portfolio to cover withdrawals. Assets in the banking system are now $2 trillion lower than their book value as a result of the rate hikes, according to a <a href="https://www.dailywire.com/news/banking-system-is-sound-and-government-will-back-deposits-at-smaller-banks-yellen-promises" target="_blank" rel="noopener">study</a> from analysts at the National Bureau of Economic Research.
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Western Alliance, another regional bank based in Phoenix, Arizona, serves clients throughout the western part of the country and had likewise seen tumult on the stock market after the sale of First Republic Bank. Two people briefed on discussions at Western Alliance claimed in a <a href="https://www.ft.com/content/bf2bd5af-1e55-4be3-b29d-f5cae9533b29" target="_blank" rel="noopener">report</a> for the Financial Times that the firm was considering options such as a full or partial sale, an assertion that the bank called “absolutely false” as a spokesperson contended that the article was “an instrument of short sellers and as a conduit for spreading false narratives about a financially sound and profitable bank.”
Western Alliance confirmed in a <a href="https://www.businesswire.com/news/home/20230511005521/en/Western-Alliance-Bancorporation-Issues-Deposit-Update" target="_blank" rel="noopener">statement</a> on Thursday that deposits have slightly increased since the beginning of last week while “readily available liquidity is approximately double the amount of uninsured deposits” as of Tuesday. Share prices for the company were relatively flat on Thursday as of the early afternoon, trading at $27.60 relative to the $27.48 closing price on Wednesday, despite a 61% decline from $71.56 on March 8.

PacWest

Regional Bank Stock Plummets After Company Reveals Deposits Dropped Again

PacWest Stock Plummets After Company Reveals Deposits Dropped Again

Banks

The consumer price index rose 4.9% between April 2022 and April 2023, marking a continued decline from elevated <a href="http://dailywire.com/topic/inflation" target="_blank" rel="noopener">inflation</a> even as higher price levels continue to constrain household budgets.
The month-to-month increase of 0.4% was in line with analyst expectations, while core inflation, which factors out the more volatile food and energy categories, also rose 0.4% and is in line with expectations. Food prices were flat and energy prices rose 0.6% while shelter prices, one of the largest contributors to the overall month-to-month increase, rose 0.4%, according to a <a href="https://www.bls.gov/news.release/pdf/cpi.pdf" target="_blank" rel="noopener">report</a> from the Bureau of Labor Statistics.
Despite the slight decrease from the 5.0% headline inflation <a href="https://www.dailywire.com/news/headline-inflation-edges-downward-even-as-costs-for-many-key-items-continue-to-soar" target="_blank" rel="noopener">recorded</a> in March 2023, food and electricity prices have increased 7.7% and 8.4%, respectively, between April 2022 and April 2023.
The latest inflation data comes as officials at the Federal Reserve increased the target federal funds rate in an effort to slow price level increases, a policy regime that raises the cost of borrowing funds for consumers and businesses, thereby lowering inflation, but dampening overall economic activity. Federal Reserve policymakers <a href="https://www.dailywire.com/news/federal-reserve-unveils-quarter-point-target-interest-rate-hike-as-banking-system-reels" target="_blank" rel="noopener">introduced</a> a quarter-point rate hike last week, marking a continued slowdown from previous rate hikes and reflecting caution as the financial sector reels from the <a href="https://www.dailywire.com/news/confidence-in-american-banks-is-low-amid-continued-financial-sector-tumult" target="_blank" rel="noopener">collapse</a> of three medium-sized banks.
Officials at the Federal Reserve have broadly targeted a 2.0% inflation rate and maximum employment over the past four decades. Even amid the elevated price level environment and macroeconomic constraints such as a bottlenecked supply chain, the labor market has been a relative bright spot in the economy: unemployment was charted at 3.4% last month, according to <a href="https://www.dailywire.com/news/unemployment-rate-ticks-down-number-of-jobs-increase-despite-economic-tumult" target="_blank" rel="noopener">data</a> from the Bureau of Labor Statistics released on Friday. Low labor force participation, on the other hand, has worsened inflationary pressures and supply chain constraints as businesses increase wages to fill their payrolls and seek to retain more workers.
Economic growth in the United States slowed to a 1.1% annualized rate in the first quarter, marking a significant decline from previous quarters, according to an advance <a href="https://www.dailywire.com/news/american-economic-growth-slows-to-1-1-in-first-quarter" target="_blank" rel="noopener">estimate</a> released last week by the Bureau of Economic Analysis. Federal Reserve officials have also <a href="https://www.dailywire.com/news/federal-reserve-officials-reveal-when-they-expect-a-recession-to-strike" target="_blank" rel="noopener">concluded</a> that the present instability in the financial system warrants a recession forecast for the latter portion of the year, followed by a predicted recovery over the subsequent two years.
President Joe Biden has repeatedly asserted that his policies are responsible for easing price levels in some product categories, even as inflation remains between three times and four times higher than levels seen at the start of his administration. “We are making progress in the fight against inflation,” he commented in one <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2023/03/31/statement-from-president-joe-biden-on-february-pce-report/" target="_blank" rel="noopener">statement</a> released in April. “The fight against inflation isn’t over, and every day my administration is working to give families more breathing room.”
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Federal Reserve Chair Jerome Powell and Treasury Secretary Janet Yellen each previously asserted that rising price levels were a temporary result of the demand increases that followed worldwide government lockdowns. Yellen <a href="https://www.dailywire.com/news/janet-yellen-admits-she-was-wrong-about-inflation-being-small-risk" target="_blank" rel="noopener">admitted</a> last year that she was incorrect due to “unanticipated and large shocks to the economy that have boosted energy and food prices.”

Consumer Prices

Headline Inflation Ticks Downward As Some Product Categories Continue To Surge

Headline Inflation Ticks Downward

Nearly half of Americans are concerned about the security of their <a href="http://dailywire.com/topic/banks" target="_blank" rel="noopener">bank</a> deposits after the <a href="http://dailywire.com/topic/economy" target="_blank" rel="noopener">failure</a> of multiple financial institutions, according to a <a href="https://news.gallup.com/poll/505439/half-worry-money-safety-banks.aspx" target="_blank" rel="noopener">survey</a> from Gallup unveiled on Thursday.
Silicon Valley Bank and Signature Bank, both of which had large majorities of account holders with balances above the maximum threshold guaranteed by the Federal Deposit Insurance Corporation, collapsed in early March as customers rushed to withdraw their funds. Neither insured nor uninsured deposits at the former two banks lost access to their balances. First Republic Bank was nevertheless <a href="https://www.dailywire.com/news/jpmorgan-chase-the-nations-largest-bank-acquires-first-republic-bank-after-government-takeover" target="_blank" rel="noopener">obtained</a> and subsequently sold by regulators on Monday as unease continued, while PacWest <a href="https://www.dailywire.com/news/federal-reserve-just-said-banks-are-sound-and-resilient-another-one-might-collapse" target="_blank" rel="noopener">announced</a> the possibility of a sale on Thursday, and other regional banks with reduced deposit levels faced <a href="https://www.dailywire.com/news/several-regional-banks-face-market-turmoil-after-first-republic-collapse" target="_blank" rel="noopener">turmoil</a> on the stock market.
Some 19% of Americans are “very worried” about the safety of their funds deposited in banks and other financial institutions while 29% are “moderately worried,” according to the survey from Gallup. Around 30% are “not too worried,” and, on the other hand, 20% are “not worried at all.”
Gallup conducted the poll between April 3 and April 25, the month after Silicon Valley Bank and Signature Bank collapsed. First Republic Bank had not yet failed at the time of the survey.
The FDIC maintains the Deposit Insurance Fund, which guarantees accounts with balances less than $250,000. Depositors can hold an unlimited number of insured accounts provided they are hosted at separate financial institutions backed by the FDIC, which fills the Deposit Insurance Fund with fees on banks rather than taxpayer dollars.
Gallup noted that heightened concern about the security of deposits could emerge from either “lack of awareness of the protections for small accounts provided by federal deposit insurance” or “fear of a snowball effect that could bring down federal insurance as well.”
Whether or not concerns about the banking system are justified, regulators have sought to <a href="https://www.dailywire.com/news/yellen-tells-lawmakers-that-the-american-banking-system-remains-sound-after-two-banks-collapse" target="_blank" rel="noopener">assure</a> investors and depositors in recent weeks that the financial sector is supported.
Republicans and independents were more likely than Democrats to state that they were at least “moderately worried” about the safety of their bank accounts, according to Gallup. Respondents with lower annual household incomes and those without college degrees were also more likely to express worry. Party affiliation was likewise a strong predictor of respondent sentiments about the 2008 financial crisis: Democrats were more likely than Republicans to state that they were “very” or “moderately worried” two months before the election of President Barack Obama, while levels of concern fell for Democrats and rose for Republicans in the month after his election.
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The continued volatility in the financial sector occurs after Federal Reserve Chair Jerome Powell <a href="https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20230503.pdf" target="_blank" rel="noopener">declared</a> on Wednesday afternoon that the banking system remains “sound and resilient.” He said at a press conference that officials are “committed to learning the right lessons from this episode and will work to prevent events like these from happening again.”
Monetary policymakers <a href="https://www.dailywire.com/news/federal-reserve-officials-reveal-when-they-expect-a-recession-to-strike" target="_blank" rel="noopener">concluded</a> that instability in the banking system warrants a recession forecast for the end of the year, followed by a predicted recovery over the course of the subsequent two years. “If banking and financial conditions and their effects on macroeconomic conditions were to deteriorate more than assumed in the baseline, then the risks around the baseline would be skewed to the downside for both economic activity and inflation, particularly because historical recessions related to financial market problems tend to be more severe and persistent than average recessions,” minutes from a recent Federal Reserve meeting said.

First Republic Bank

Confidence In American Banks Is Low Amid Continued Financial Sector Tumult

Confidence In American Banks Is Low Amid Multiple Collapses

<a href="http://dailywire.com/topic/unemployment" target="_blank" rel="noopener">Unemployment</a> reached an historically low 3.4% in April even as the number of new <a href="http://dailywire.com/topic/jobs" target="_blank" rel="noopener">jobs</a> exceeded analysts’ forecasts, according to <a href="https://www.bls.gov/news.release/empsit.nr0.htm" target="_blank" rel="noopener">data</a> from the Bureau of Labor Statistics released Friday, despite a number of <a href="http://dailywire.com/topic/economy" target="_blank" rel="noopener">economic</a> headwinds and indications of slowing growth.
Total nonfarm employment increased by 253,000, surpassing analysts’ expectations of 180,000 new positions but falling below the 290,000 average recorded over the past six months. The recorded 3.4% unemployment rate in April marked a slight decrease from the 3.5% rate in March and is tied for the lowest joblessness level since 1969.
&#8220;Hiring has been slowing, but perhaps not as much as expected given the headwinds of persistent inflation, the steep increase in interest rates, and financial strains associated with bank failures,” Bankrate Senior Economic Analyst Greg McBride said in comments provided to The Daily Wire.
The scientific and technical services sector added 45,000 new positions, while the business services sector added 43,000 new positions and the healthcare sector added 40,000 new positions. Job losses occurred in temporary help services, which lost 23,000 positions.
The labor market has widely been considered a bright spot in an otherwise dismal economic landscape marked by record inflation and persistent supply chain bottlenecks. Low labor force participation across the economy, on the other hand, has worsened both trends as businesses raise wages to fill their payrolls and attract or retain more workers.
Robust demand for workers occurs even as pay increases more slowly than price levels, causing a decrease in purchasing power for households. Wages increased 4.4% on an annual basis as of April, surpassing expectations of 4.2% but falling below the 5.0% inflation rate recorded for March, according to <a href="https://www.dailywire.com/news/headline-inflation-edges-downward-even-as-costs-for-many-key-items-continue-to-soar" target="_blank" rel="noopener">data</a> from the Bureau of Labor Statistics.
The most recent unemployment report was unveiled amid continued unease in the financial sector: Silicon Valley Bank and Signature Bank, where the majority of customers maintained account balances above the Federal Deposit Insurance Corporation threshold, collapsed in March as users rushed to withdraw funds. First Republic Bank was obtained and subsequently sold by regulators on Monday, while PacWest executives <a href="https://www.dailywire.com/news/federal-reserve-just-said-banks-are-sound-and-resilient-another-one-might-collapse" target="_blank" rel="noopener">announced</a> the possibility of a sale this week and other regional banks with reduced deposit levels faced <a href="https://www.dailywire.com/news/several-regional-banks-face-market-turmoil-after-first-republic-collapse" target="_blank" rel="noopener">turmoil</a> on the stock market.
Federal Reserve officials meanwhile <a href="https://www.dailywire.com/news/federal-reserve-unveils-quarter-point-target-interest-rate-hike-as-banking-system-reels" target="_blank" rel="noopener">announced</a> a quarter-point increase in the target federal funds rate, a move which increases the cost of borrowing money such that inflationary pressures decrease, even as businesses assume less debt and decrease hiring.
&#8220;The Federal Reserve indicated this week that it is non-committal on the question of further interest rate increases,” McBride continued. “Next week’s inflation readings, including the Consumer Price Index, will be important to watch.&#8221;
American economic growth slowed to a 1.1% annualized rate in the first quarter, marking a significant decline from previous quarters as interest rate hikes dampen economic activity, according to an advance <a href="https://www.dailywire.com/news/american-economic-growth-slows-to-1-1-in-first-quarter" target="_blank" rel="noopener">estimate</a> released last week by the Bureau of Economic Analysis. Federal Reserve officials <a href="https://www.dailywire.com/news/federal-reserve-officials-reveal-when-they-expect-a-recession-to-strike" target="_blank" rel="noopener">concluded</a> that the instability in the financial system warrants a recession forecast for the end of the year, followed by a predicted recovery over the subsequent two years.
Interest rate hikes contributed to the substantial loss incurred by Silicon Valley Bank as executives liquidated a long-term bond portfolio to cover withdrawals. Assets in the banking system are $2 trillion lower than their book value as a result of Federal Reserve efforts to implement the current rollback in monetary stimulus, according to a recent <a href="https://www.dailywire.com/news/banking-system-is-sound-and-government-will-back-deposits-at-smaller-banks-yellen-promises" target="_blank" rel="noopener">study</a> from analysts at the National Bureau of Economic Research.

Grocery Store

Unemployment Rate Ticks Down, Number Of Jobs Increase Despite Economic Tumult

Unemployment Rate Ticks Down Despite Economic Tumult

Jobs

Unemployment

Multiple <a href="http://dailywire.com/topic/congress" target="_blank" rel="noopener">lawmakers</a> sold their <a href="http://dailywire.com/topic/stock-market" target="_blank" rel="noopener">shares</a> in First Republic Bank in the weeks before the firm collapsed and was sold to JPMorgan Chase by <a href="http://dailywire.com/topic/banks" target="_blank" rel="noopener">financial</a> regulators.
First Republic Bank <a href="https://www.dailywire.com/news/jpmorgan-chase-the-nations-largest-bank-acquires-first-republic-bank-after-government-takeover" target="_blank" rel="noopener">imploded</a> on Monday, weeks after Silicon Valley Bank and Signature Bank similarly collapsed, as account holders with balances above the Federal Deposit Insurance Corporation threshold rushed to withdraw their funds. Periodic transaction disclosure forms reveal that multiple lawmakers jettisoned their shares in First Republic Bank or acquired shares in JPMorgan Chase over the past two months, a phenomenon which follows accusations that some lawmakers routinely buy stocks at opportune times and cut losses by selling shares.
The lawmakers who sold shares of First Republic Bank indeed avoided heavy losses: the firm’s stock fell from $121.54 at the beginning of the year to $3.51 at the time of the collapse.
Rep. Lois Frankel (D-FL) <a href="https://www.documentcloud.org/documents/23794836-rep-lois-frankel-stock-trades-marchapril-2023" target="_blank" rel="noopener">sold</a> between $1,001 and $15,000 in First Republic Bank shares on March 16 and bought between $1,001 and $15,000 in JPMorgan Chase shares on March 22. Rep. Ro Khanna (D-CA) purchased between $1,001 and $15,000 shares of First Republic Bank shares on March 9 but likewise <a href="https://www.documentcloud.org/documents/23794842-rep-ro-khanna-stock-trades-march-2023" target="_blank" rel="noopener">sold</a> the same indeterminate amount of the assets on March 15, as well as purchased between $1,001 and $15,000 in JPMorgan Chase stock on both March 3 and March 14. His disclosure form said the shares belonged to his wife and dependent child.
Rep. John Curtis (R-UT) meanwhile <a href="https://www.documentcloud.org/documents/23794833-rep-john-curtis-stock-trades-march-2023" target="_blank" rel="noopener">sold</a> between $1,000 and $15,000 in First Republic Bank shares on March 16, and the wife of Rep. Earl Blumenauer (D-OR) <a href="https://www.documentcloud.org/documents/23794838-rep-earl-blumenauer-stock-trades-march-2023" target="_blank" rel="noopener">sold</a> between $1,001 and $15,000 in First Republic Bank stock on March 20. Rep. Dan Goldman (D-NY) also <a href="https://www.documentcloud.org/documents/23794843-rep-daniel-goldman-stock-trades-march-2023" target="_blank" rel="noopener">sold</a> between $1,001 and $15,000 in First Republic Bank shares on March 15.
Rep. Nicole Malliotakis (R-NY) previously <a href="https://www.dailywire.com/news/lawmakers-made-massive-stock-trades-amid-failure-of-multiple-banks" target="_blank" rel="noopener">bought</a> between $1,001 and $15,000 of stock in New York Community Bancorp, the company which would acquire Signature Bank, on March 17.
The trades amid the possible financial crisis marked one of several instances in which lawmakers were criticized for improperly leveraging their insider knowledge of the financial markets. Democrats and Republicans, including conservative Rep. Matt Gaetz (R-FL) and leftist Rep. Alexandria Ocasio-Cortez (D-NY), proposed a <a href="https://www.dailywire.com/news/aoc-and-matt-gaetz-team-up-to-ban-stock-trading-among-lawmakers" target="_blank" rel="noopener">bill</a> on Tuesday that would prohibit fellow lawmakers, their spouses, and their dependents from buying or selling individual stocks, the latest of multiple prior legislative proposals to address the controversy.
“The fact that members of the Progressive Caucus, the Freedom Caucus, and the Bipartisan Problem Solvers Caucus, reflecting the entirety of the political spectrum, can find common ground on key issues like this should send a powerful message to America,” Rep. Brian Fitzpatrick (R-PA), another sponsor of the bill, said in a <a href="https://fitzpatrick.house.gov/2023/5/fitzpatrick-ocasio-cortez-gaetz-krishnamoorthi-introduce-the-bipartisan-restoring-faith-in-government-act" target="_blank" rel="noopener">statement</a>. “We must move forward on issues that unite us, including our firm belief that trust in government must be restored, and that members of Congress, including their dependents, must be prohibited from trading in stocks while they are serving in Congress and have access to sensitive, inside information.”
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The failure of the three medium-sized banks could threaten the economy and induce a contraction. Officials at the Federal Reserve <a href="https://www.dailywire.com/news/federal-reserve-officials-reveal-when-they-expect-a-recession-to-strike" target="_blank" rel="noopener">concluded</a> that the volatility in the financial system warrants a recession forecast for the end of the year, followed by a predicted recovery over the course of the subsequent two years.

Lois Frankel

Lawmakers Dumped Their Shares In First Republic Bank Before The Company Collapsed

Lawmakers Dumped Their Shares In First Republic Bank Before The Firm Collapsed

Officials at the <a href="http://dailywire.com/topic/federal-reserve" target="_blank" rel="noopener">Federal Reserve</a> announced a 0.25% increase in the target <a href="http://dailywire.com/topic/interest-rates" target="_blank" rel="noopener">federal funds</a> rate on Wednesday, marking a slowdown from previous rate hikes meant to combat <a href="http://dailywire.com/topic/inflation" target="_blank" rel="noopener">inflation</a>, even as the financial sector contends with the collapse of three medium-sized regional <a href="http://dailywire.com/topic/banks" target="_blank" rel="noopener">banks</a>.
Rate hikes increase the cost of borrowing money, decreasing inflationary pressures as consumers and businesses assume less debt but simultaneously slowing the economy. Federal Reserve officials formerly set interest rate targets as low as 0.0% during the lockdown-induced recession to stimulate economic activity; rate targets now sit between 5.0% and 5.25%.
The Federal Open Market Committee said in a <a href="https://www.federalreserve.gov/newsevents/pressreleases/monetary20230503a.htm" target="_blank" rel="noopener">statement</a> that officials will &#8220;take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments&#8221; as they consider future actions to decrease price pressures.
Central bankers <a href="https://www.dailywire.com/news/breaking-federal-reserve-hikes-target-interest-rates-half-a-percentage-point" target="_blank" rel="noopener">raised</a> rates by 0.75% on four occasions before implementing a 0.5% hike at the end of last year. Officials also <a href="https://www.dailywire.com/news/federal-reserve-hikes-target-interest-rates-by-quarter-point-as-officials-balance-fighting-inflation-and-protecting-banks" target="_blank" rel="noopener">hiked</a> rates 0.25% two months ago.
The most recent target rate increase occurs after inflation reached 5.0% two months ago, according to <a href="https://www.dailywire.com/news/headline-inflation-edges-downward-even-as-costs-for-many-key-items-continue-to-soar" target="_blank" rel="noopener">data</a> from the Bureau of Labor Statistics, marking relief from the 9.1% rate seen last summer even as costs for many items remain elevated and wage increases fail to keep pace with price levels. Record inflation coincides with supply chain bottlenecks and labor shortages, which have forced firms to increase prices on consumers over the past two years.
American economic growth meanwhile slowed to a 1.1% annualized rate in the first quarter, marking a significant decline from previous quarters as the headwinds slow recovery from the recession, according to an advance <a href="https://www.dailywire.com/news/american-economic-growth-slows-to-1-1-in-first-quarter" target="_blank" rel="noopener">estimate</a> from the Bureau of Economic Analysis.
The rate hike announcement also comes days after First Republic Bank collapsed, passed into Federal Deposit Insurance Corporation receivership, and was <a href="https://www.dailywire.com/news/jpmorgan-chase-the-nations-largest-bank-acquires-first-republic-bank-after-government-takeover" target="_blank" rel="noopener">sold</a> by regulators to JPMorgan Chase. Several other regional banks, including PacWest, Zions, Comerica, and Western Alliance, faced <a href="https://www.dailywire.com/news/several-regional-banks-face-market-turmoil-after-first-republic-collapse" target="_blank" rel="noopener">turmoil</a> on the stock market this week as the sector continues to reel from the sudden collapses of Silicon Valley Bank and Signature Bank two months ago.
Interest rate hikes contributed to the substantial loss incurred by Silicon Valley Bank as executives liquidated a long-term bond portfolio to cover withdrawals. Assets in the banking system are $2 trillion lower than their book value as a result of Federal Reserve efforts to implement the current rollback in monetary stimulus, according to a recent <a href="https://www.dailywire.com/news/banking-system-is-sound-and-government-will-back-deposits-at-smaller-banks-yellen-promises" target="_blank" rel="noopener">study</a> from analysts at the National Bureau of Economic Research.
Officials at the Federal Reserve <a href="https://www.dailywire.com/news/federal-reserve-officials-reveal-when-they-expect-a-recession-to-strike" target="_blank" rel="noopener">concluded</a> that the volatility in the financial system warrants a recession forecast for the end of the year, followed by a predicted recovery over the course of the subsequent two years. Policymakers also estimated that the historically low unemployment rate would rise toward the beginning of next year.
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“If the effects of the recent developments in the banking sector on macroeconomic conditions were to abate quickly, then the risks around the baseline would be tilted to the upside for both economic activity and inflation,” minutes from a recent meeting said. “If banking and financial conditions and their effects on macroeconomic conditions were to deteriorate more than assumed in the baseline, then the risks around the baseline would be skewed to the downside for both economic activity and inflation, particularly because historical recessions related to financial market problems tend to be more severe and persistent than average recessions.”

Federal Reserve Unveils Quarter-Point Target Interest Rate Hike As Banking System Reels

Federal Reserve Unveils Quarter-Point Rate Hike As Financial Sector Reels

Interest Rates

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