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Why The Stock Market Crashing Shouldn’t Be Cause For Panic
Wealth inspiration part 31.
The media and the general public always start to freak out when the stock market drops.
It’s easy to understand why. If you have your hard-earned investment dollars in the market, and it drops 20% or more, you feel like you are becoming poorer.
There is so much information on the market, you can see your wealth slipping away in real-time. And that hurts!
Next, people start calling the recession. They see inflation, rising interest rates, and the stock market dropping, so they assume the economy is heading off a cliff.
But is it?
Today’s quote is from the famed economist Paul Samuelson:
“The stock market has forecast nine of the last five recessions.”
So while a recession usually results in a stock market crash, a stock market crash does not always cause a recession.
What causes a recession is negative GDP growth for two consecutive quarters. This means that businesses are losing money and laying off people.
