Market Decline
People have been asking about the reasons for the recent stock market decline. But the real question is: why has there been this run up recently in the first place?
The Biden-Harris administration has benefitted from the situation that since before the pandemic, job openings in the US have far exceeded the total number of unemployed people. Markets have been buoyed by the fact that as people lost their jobs, they were able to replace them with those that had been previously unfillable. In addition, Artificial Intelligence (AI) has been giving a significant additional boost to the economy.
For these reasons, the terrible Biden-Harris economic policies have been pushed into the background, which include:
1) severely increased regulation — including restrictions on mergers and acquisitions, SEC burdens, NLRB restrictive labor policies, etc.; 2) substantial tariffs; 3) threats of, and implementation of, higher taxes; and 4) legislation directing the use of wasteful and inefficient green energy policies
But they could only be lucky for so long. Now that the excess jobs in the economy have mostly been filled, leading to increasing unemployment rates and weakening of the GDP, the terrible Biden-Harris economic policies are beginning to be felt. And there is no end in sight. Should Kamala Harris win the election in November, and these policies continue, I believe there could be a severe recession. The market realizes that there is no reason for companies to invest, and prospects for the future have turned quite gloomy.
Even with Trump winning in November, unless he is able to materially reduce regulation, keep taxes low, and avoid his debilitating tariffs, there could still be a recession ahead.
The lesson we have learned is clear: high regulation, along with the threat of higher taxes, can only be severely detrimental to the economy.