The markets are doing something weird. No — something else.
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What started as a market sell-off story is, it emerges, straining the inner workings of the financial system itself. As even the most basic economic relationships are starting to go a little haywire, the Federal Reserve, the traditional lender of last resort, is pumping more than a trillion dollars into the bond market.
Marketplace’s David Brancaccio spoke to Neil Irwin, a senior economic correspondent for The New York Times, about what all of the strangeness means.
“What we’re seeing is a lot of evidence from a lot of different markets that there’s a real cash crunch happening in the financial system right now. Big institutions are selling whatever they can to raise cash that they think they might need for handling this potential recession,” he said.
These kinds of credit freeze-ups are worrying because they’re reminiscent of what happened back in 2008 during the financial crisis. Irwin said it’s starting to feel like the beginning of a horror movie.
“There’s always this period of the horror movie when nothing actually bad has happened to the characters yet, but there’s all these ominous little things that you see and you as the viewer know that bad things are to come. I worry that we’re seeing a lot of those warning signs out there, that this could could be a really dark chapter in economic history.”
Click the audio player above to hear the interview.
COVID-19 Economy FAQs
How many people are flying? Has traveled picked up?
Flying is starting to recover to levels the airline industry hasn’t seen in months. The Transportation Security Administration announced on Oct. 19 that it’s screened more than 1 million passengers on a single day — its highest number since March 17. The TSA also screened more than 6 million passengers last week, its highest weekly volume since the start of the COVID-19 pandemic. While travel is improving, the TSA announcement comes amid warnings that the U.S. is in the third wave of the coronavirus. There are now more than 8 million cases in the country, with more than 219,000 deaths.
How are Americans feeling about their finances?
Nearly half of all Americans would have trouble paying for an unexpected $250 bill and a third of Americans have less income than before the pandemic, according to the latest results of our Marketplace-Edison Poll. Also, 6 in 10 Americans think that race has at least some impact on an individual’s long-term financial situation, but Black respondents are much more likely to think that race has a big impact on a person’s long-term financial situation than white or Hispanic/Latinx respondents.
Find the rest of the poll results here, which cover how Americans have been faring financially about six months into the pandemic, race and equity within the workplace and some of the key issues Trump and Biden supporters are concerned about.
What’s going to happen to retailers, especially with the holiday shopping season approaching?
A report out recently from the accounting consultancy BDO USA said 29 big retailers filed for bankruptcy protection through August. And if bankruptcies continue at that pace, the number could rival the bankruptcies of 2010, after the Great Recession. For retailers, the last three months of this year will be even more critical than usual for their survival as they look for some hope around the holidays.
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