CNBC.. That’s why 1H was the worst over 50 years

A number of factors combined to make the first half year the worst for the stock market since 1970, and they all revolve around inflation.

The cost of living has risen this year to levels not seen in the United States since the early 1980s. Worse, Federal Reserve officials misrepresented their estimates of inflation as “transient”, but these expectations currently seem inaccurate, which puts the market and the economy at risk, especially since it is still fragile since the Covid-19 pandemic.

Currently, six months into the year, the damage has been severe with the S&P 500 down nearly 20%.

According to CNBC, it was the supply chain constraints that the Fed believed would mitigate much of the inflation rise. Demand has simply overwhelmed shippers’ ability to get products to market, resulting in a sharp rise in prices. The Russian attack on Ukraine has also exacerbated some of those problems, including soaring energy and food prices. Shoppers’ confidence waned and inflation expectations rose among consumers if not in the financial markets.

In the context, news reports indicated that the inflation rate in the euro area hit a new record high in June, reaching 8.6% on an annual basis, as announced by the European Statistics Office, while the crisis in Ukraine is fueling the increase in energy and food prices.