Unrest overseas ripples into U.S. economy
A woman passes by an out of service board of an exchange house in downtown Buenos Aires on January 24, 2014.
The bottom fell out of the emerging currency market – relatively speaking. Argentina made headlines, and other countries also had problems including Ukraine and Turkey.
“A lot of economies around the world, countries that were doing pretty good…have been running into some troubles in the last six months to a year,” says Tim Fernholz, a business reporter at Quartz. He says those problems all came to a head late last week.
In some ways we--or rather, the Federal Reserve-- are to blame. As interest rates here rise, some expect that more and more money will come back to the United States, and to other developed economies.
“People are worried.. that we're leaving these emerging economies outside without a coat,” Fernholz says.
Fernholz says we’re feeling a ripple effect because some of the biggest corporations in the U.S. – including those on the S&P 500 Stock Index – make half of their revenue from outside U.S. borders: “And if economic problems are happening overseas, their bottom line isn’t’ going to look so good. Their stock numbers are not going to look so good.”
Which is what we saw on Friday. That tumbling stock market in turn means that things tied to the stock market, like your retirement account, probably also took a fall.