According to CNBC's reporting, the downturn in the stock market has caused American households to lose a total of $9 trillion in worth, representing the greatest reduction in wealth since the Great Recession of 2008.
According to recent data provided by the Federal Reserve, the value of the stock holdings that Americans have in firms and mutual funds has decreased to $33 trillion since the beginning of the year, when those holdings were valued at $42 trillion. The losses that financial analysts anticipate could approach another trillion dollars.
When combined with rising interest rates and inflation, the jolt to the stock market will make banks less eager to lend money, households more likely to preserve money, and investors less interested in beginning new ventures.
Mark Zandi, chief economist at Moody's Analytics, predicted that the fall in the stock market would result in an additional 0.2% decrease in the total production of the American economy. This will make the current economic downturn even more protracted and severe.
If the current decline in stock prices continues, Zandi predicts that it would act as a modest but considerable headwind to consumer consumption and economic expansion in the months ahead.
As a result of the ongoing economic downturn as well as rising tensions both domestically and internationally, it appears that Americans are becoming less dedicated to spending any spare income and more keen in saving as a hedge against inflation.
Because over half of the population does not own any equities, those in the United States who already had the most wealth were among the hardest hit.
The richest 1% of Americans were responsible for $5 trillion of that loss, while the wealthiest 10% of Americans saw a loss of 22% of their net worth, totaling $8 trillion.
The drop is foreseen and considered to be in a healthy state by economists who have witnessed the largest monetary expansion in American history as a result of COVID-19 expenditure. During the years 2020 and 2021, the value of American stock wealth increased from $22 trillion to $42 trillion.
The preceding is a summary of an article that originally appeared on Headline Wealth.