Home-made crisis The stock market slump explained in five points

Prices on the US stock markets are falling more sharply than at any time since 2022. The crisis is homemade: an overview shows you in 5 points what scares economists and the economy.

The US stock markets have come under significant pressure in some cases. Fears of a negative trend for the economy are increasingly spreading in the United States. Technology stocks, which are particularly sensitive to the economy, have suffered as a result.

In an interview broadcast at the weekend, Trump refused to rule out a recession when asked. He merely said: "I hate to predict these things." There will be a transition phase, Trump said, referring to the effects of his economic policy plans.

"Stock prices have been high for some time, and this could just be a market correction," the Wall Street Journal (WSJ) ponders. "But there are also signs of an economic slowdown that should put the Trump administration on alert."

Much "points to slower growth even as the economy escapes recession. What's behind this? The following 5 points clarify.

"Uncertainty is always poison for investment and economic growth," is how German economist Monika Schnitzer sums it up. "And since Donald Trump took office, it has increased even further." The new US president is "not only calling into question the principles of rules-based free trade, but also transatlantic relations in general", says Schnitzer.

The tariffs against Canada and Mexico, which have so far only been suspended, are scaring investors: because American industry is closely interwoven with that of its neighboring countries, these tariffs would have a fatal impact on the manufacture of many products - such as those from the automotive industry. US vehicles would become up to 12,000 dollars more expensive as a result.

Consumer prices in the USA rose more sharply in January than they have for a year and a half: they increased by 3 percent compared to the previous year, writes Reuters. This is due to the fact that many companies have increased their prices.

Added to this are the rising prices for food: eggs could become up to 20 percent more expensive this year. At 4.95 dollars, a dozen eggs already cost more than at the time of the pandemic, when the last negative record was set. The prices of products such as bread, coffee, sugar and steak have also risen significantly, CNN reports.

Higher prices coupled with political uncertainty are having an impact on consumer confidence: The corresponding index fell in February by the most since August 2021. It is the third month in a row that the value has fallen: it is now at the level of 2022.

"For decades, Germany was regarded as an innovation leader," explains economist Schnitzer. "Many people didn't take the newcomer Tesla, which only focused on battery electric cars right from the start, seriously for a long time. Today, Tesla is worth four times as much on the stock market as all German car manufacturers combined."

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Chinese car manufacturers have focused particularly heavily on electric cars and have received "massive state subsidies", which has made them the "world market leader in battery technology". In addition, the competition has focused on "software, infotainment and artificial intelligence, while the German industry has continued to concentrate on traditional engineering".

In addition to these basic problems for the Germans, there is also the uncertainty caused by possible tariffs. Companies such as Audi, BMW and Volkswagen have invested massively in plants in Mexico - in the expectation that the free trade agreement in North America will endure. Trump's punitive measures, which are suspended until April 2, threaten their profitability.

Consumers also sometimes cause the mood on the stock market to plummet. The best example is Tesla: in Europe, where company boss Musk openly supports right-wing parties, sales have plummeted by 45 percent. Fewer Teslas are also being sold in China and other important sales markets.

Elon Musk's fortune has decreased due to the corresponding fall in the share price: While the richest man in the world was still worth 486 billion dollars before the turn of the year, he lost 132 billion dollars again after January 1. On March 10 alone, his assets fell by 29 billion dollars. On the same day, his platform X lost 15 percent on the stock market.

In Canada, Trump's desire to annex the country has led to a boycott of US products. Wine and spirits from the neighboring country are currently having a particularly hard time in Canada. The number of people going on vacation to the USA fell by a significant 23% in February.

Elon Musk's Ministry of Efficiency is cutting jobs and programs with a red pencil. In the case of USAID, this also affects American agriculture: at least 400 producers have sold their goods to the Department of Development. Of the 5 billion dollars spent on food in the 2023/2024 fiscal year, around 2 billion ended up in the pockets of American farmers.

The cuts can also have economic consequences in other areas: If appropriate government officials are absent, permits may be delayed, loans approved later or information passed on too late. "We could soon find out the hard way that people are driving the US economy," CNBC quotes financial advisor Callie Cox.

Ernie Tedeschi from Yale University is also critical of the process: "The economic consequences of layoffs are like a domino effect that spreads through the local economy to companies that seem to have no connection to the federal government at all."