The new economic crisis has already begun: The last week has been brutal

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The new economic crisis has already begun: The last week has been brutal

This is a moderate recession, not yet officially declared, but we will have negative GDP growth in the first half of the year, "Jeremy Siegel, a professor at Wharton Business School, told CNBC commenting on events on Wall Street.

Below 30,000 points

Although the movement of futures contracts on Friday suggested the growth of leading stock indices, this did not change much the fact that stock prices fell sharply last week. As of Thursday, the S&P 500 index had weakened six percent on a weekly basis, its worst weekly result since March 2020.

All 11 sectors that make up this index are down at least 15 percent from record highs. In addition, the Dow Jones fell below 30,000 points on Thursday, its lowest level since January last year. That measure was 4.7 percent a weekly decline last Thursday, meaning it has seen a weakening of 11 of the past 12 weeks.

Investors see a new (old) reason for concern in the fact that the world's central banks are raising interest rates due to high inflation, which is why the risks of recession are growing. On Wednesday, the US Federal Reserve raised interest rates by as much as 0.75 percentage points, the largest one-off increase in the price of money since 1994.

Therefore, they are now in the range of 1.5 to 1.75 percent, which is their highest level since March 2020 and the outbreak of coronary heart disease. This is followed by further increases in interest rates, given that inflation is at its highest level in 40 years, above 8.5 percent, so that, according to Fed leaders, interest rates could reach 3.4 percent by the end of the year, the highest level since 2008.

years. Wells Fargo Bank analysts believe that there is now a 50 percent chance that a recession will occur soon. Many other banks, including Deutsche Bank and Morgan Stanley, warn that the risks of a recession are growing.

Increst rates in banks are rising

For the fifth session in a row, the British Central Bank increased interest rates on Thursday. Because of all this, the S&P 500 loss index has been around 23 percent since the beginning of the year.