Is the world heading into recession?
US President Donald Trump’s tariffs have ignited wildfires across global stock markets, but does that mean we are heading for a recession?
The first thing to stress is that what happens in the stock market is not the same as what happens in the economy – falling share prices do not always mean economic misery ahead.
But sometimes they do.
Very large falls in stock market values, like these, mean there has been a fundamental reappraisal of future profits for the companies that make up the stock markets of the world.
What markets quite reasonably expect is that increased tariffs will mean that costs will rise and profits will fall.
That doesn’t mean that a recession is inevitable but the chances are clearly much higher than they were before…
