Recent turmoil in the stock market has raised concerns about potential impacts on California's economy, linked to trade wars and inflation. Utilizing 47 years of data from the NASDAQ composite index and California's unemployment rates, analysis shows a correlation between NASDAQ fluctuations and economic health. While the NASDAQ is currently up 7% year-over-year, this is considerably lower than its historical average. Historical data indicates that declines in NASDAQ typically lead to increases in unemployment rates, signaling potential economic downturns for California.
It's been an ugly few days in the stock market as investors suddenly grew nervous about brewing trade wars, federal job cuts, reheated inflation and overall economic anxieties.
Could an extended bout of Wall Street turbulence toss California's healthy economy into reverse?
The 12-month gain is half NASDAQ's 14% average annual gain over 47 years, and it's the smallest yearly advance since the summer of 2023.
Extended periods of stock market weakness might chill the California economy. NASDAQ dips tend to occur as the state's business climate goes from healthy to troublesome.
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