The Crypto Crash Is Just the Start

The American economy isn’t looking great right now. U.S. GDP shrank last quarter, despite a hearty showing from American consumers. Inflation is high; markets are down; both wages and personal-savings rates show some troubling statistical signals. Is the U.S. destined to have a recession in 2022? I don’t know for sure. But here are nine signs that worry me.

1. Everybody’s stock portfolio is disgusting right now. The Nasdaq is down 30 percent. Growth stocks and pandemic darlings such as Peloton and Zoom have crashed more than twice that amount. Hedge funds that backed these growth stocks, including Ark and Tiger Global, have been crushed. If you look at your 401(k), you’ll see that … no, scratch that, you should under no circumstances look at your 401(k).

“The stock market is not the economy” is a thing that some people like to say. But it’s not a very useful mode of analysis. Health care isn’t the economy either, and neither is the gross metropolitan product of Los Angeles. But if either of those things crashed by 30 percent in a quarter, we would all agree that was important. Sharp declines in equity values can trickle down through the economy in all sorts of ways, discouraging investment and spending, or leading to a contagion of layoffs.

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