Are we heading for another recession? It depends whom you ask. Stocks plummeted yesterday, with the Dow Jones Industrial Average closing down 800 points to 25-479. The Nasdaq fell 242 points to 77-74. The financially heavy S&P 500 dropped 86 points to 28-40.
Experts say the steep declines happened because of the yield curve on the bond market. What’s a yield curve? Usually, people who buy bonds get higher returns on long-term notes than they do short-term notes. Now they're buying more short term notes. The last seven times this has happened the nation has experienced a recession. The last time it happened in the U.S. was 2007, just before the Great recession.
Meanwhile, the U.S. government is spending at record levels. The Treasury Department is reporting that the federal government has spent three-point-seven-trillion-dollars in the first ten months of this year. That's the most since the Great Recession. It projects that at the current pace, the deficit will reach one-trillion-dollars in the final two months of this year.
And by the way? Economists are blaming increased spending by both parties and the 2017 tax cuts for the widening federal deficit. And to review? The budget that passed two weeks ago added one-point-four-trillion-dollars in discretionary spending.
Photo Credit: Getty Images