A week-long economic and market turmoil has been putting people on edge as it brings back memories from the 2008 financial market turmoil that have to lead to a global recession. It has been the fourth day today that the financial market is unstable and the New York Federal Reserve was forced to pump $75 billion into the banking system on Friday. However, analysts are still hopeful that this scenario will not totally lead to a catastrophic ending just like 2008.
Earlier this week, the lending rates have seen a worrisome spike, amidst this, analysts believe that banks are not as scared to lend money as they were in 2008, as the banking system is “healthy” and that it’s the “plumbing that is broken.”
“Currently, it’s a plumbing problem,” said Bill Campbell, a portfolio manager at DoubleLine Capital. “This can become a confidence issue quickly.”
The financial minds are saying that the impact of what happened may have been amplified by the fact that there has been a relative calm in the financial market in the recent years and the lending rate spike was just a shock.
“If the Fed can’t maintain orderly cash markets in quiet times, what might happen during chaotic ones?” Nicholas Colas, the co-founder of DataTrek Research, wrote in a note to clients on Wednesday.
Nonetheless, the prospect of another recession is still on top of mind of many of the businesses right now. Many economic and financial experts have been warning people of the brewing recession that may come to the United States in the next few years and the best business executives in the country to believe that it might happen and ranked it as one of their main worries, a new report reveals.
Duke University/CFO Global Business Outlook survey released on Wednesday showed that more than half (53%) of the financial executives they have surveyed said that they believed that the United States would fall into a recession in late 2020. Two-thirds of them think that the economy will have a downturn before the end of this year.
