The British pound crashed below $1.10 by mid-afternoon, hitting a new 37-year low against the greenback, before diving to its lowest level ever against the US dollar early on Monday.

Markets instantly made it clear that they weren’t big fans of the approach, reports my colleague Julia Horowitz.

But in the long run? It is a healing process and one that sets the stage for a healthier economy and markets.”īritain’s new government announced a sweeping plan to rescue the British economy from recession on Friday.Īnnouncing the biggest tax cuts in 50 years at the same time as boosting spending, Finance Minister Kwasi Kwarteng defended the government’s focus on growth in spite of persistent inflation woes as a “new approach for a new era.” “The Fed is performing surgery right now on the economy,” said McMillan. “We can expect continued market turbulence for some time,” said Brad McMillan, chief investment officer for Commonwealth Financial Network.īut there is a silver lining. Goldman Sachs and Bank of America both downgraded their annual S&P 500 targets last week. The Federal Reserve’s new warning that it isn’t afraid to spark economic pain adds to the noise. The bottom line: Elevated housing prices, aching tech stocks, hot inflation and war in Europe are weighing on investors. Low-income Americans are experiencing negative real wage growth, investors are losing serious money across multiple asset classes, homebuyers are being shut out of a housing market that’s too expensive and renters are struggling to afford their leases. Policymakers revised down their forecasts for economic output through the end of 2024 and raised forecasts for the unemployment rate from their last projections published in June. The central bank’s updated economic projections last week showed that it expects to land in this scenario. It looks like a recession, and feels like a recession, but it isn’t a recession - at least not officially. The pain is sharper and lasts longer than that of a soft landing, but a “growth” recession doesn’t pull the entire economy into contraction the way a proper recession would. The new aim appears to be for a so-called growth recession: A prolonged period of meager growth and rising unemployment. But the idea has grown increasingly untenable as inflation rates remain stubbornly high while economic data softens. It wants to achieve a soft landing - that Goldilocks ideal of cooling the economy enough to bring down prices but not enough to cause a recession. What’s happening: The Fed has had the same goal since it began hiking interest rates to fight inflation in March.

Goldilocks procedure