As the stock market continues to trend downward, we spoke with associate professor Richard Gearhart on how it could impact the average person's exposure to the market: their retirement account.
- Over the last few months, the Trump Administration has touted, levied, pulled back, and negotiated on tariffs with the United States' biggest three trade partners: Canada, China, and Mexico.
- Over the last month, three stock market centerpieces: the DOW Jones, NASDAQ, and S&P 500, have all seen measurable drops likely showing a change in the United States economy.
- CSU-Bakersfield Associate Professor Richard Gearhart said those who face several decades before retirement, should likely hold their positions in the market, however if people are eyeing retirement soon, it might be a good time to reach out to a wealth management professional to explore their options.
BROADCAST TRANSCRIPT:
While we sit thousands of miles away from Wall Street, the flickering numbers and graphs of the stock exchange can send an impact reverberating throughout our communities, I'm Sam Hoyle, your neighborhood reporter, there's a lot of stuff being tossed around, so let's try and break it down into bite sized chunks.
-Leading up to election day President Trump began touting a 25% tariff on Mexico and Canada, and a 10% tariff on China.
-After his election, President Trump ordered for those tariffs, saying they would go into effect on, however, after reaching an agreement with both countries, he put the tariffs on Mexico and Canada on hold for one month.
-The United States tariffs go into effect: Canada and China retaliate immediately with tariffs of their own, and Mexico waits to impose retaliatory tariffs.
-Two days later, the Trump administration opted to pause tariffs on goods that fall under the US-Mexico-Canada trade agreement, which the trump administration brokered during
his first term.
-Lastly, well likely not lastly, but at least for the moment, the trump administration plans to levy tariffs on Canadian steel and aluminum in response to a surcharge on energy supplied by Canada to several northern states.
"We rely on Canada and Mexico for importing raw goods, timber, potash, aluminum from Canada and especially labor from Mexico. And those only improve our standards of living. And so just because one country decides to start a trade war doesn't mean we need to reciprocate. There are better ways to maintain trade balances or to stop the flow of fentanyl, or to stop the reduction or to reduce the number of illegal migrants coming into this country."
That's Richard Gearhart, an associate economics professor from CSU-B, we'll hear more from him in a second.
I glossed over quite a bit, but that's a good chunk of what's happened so far on the tariffs front, and as a result, the stock market has fallen a bit.
Over the last month, the S&P 500 dropped nearly 8% in a month, the DOW over 6.5%, and the NASDAQ over 10%
According to a Gallup poll from April of last year, nearly two thirds of americans' have money in the stock market, so what does this mean for the average person whose baseline of investing is their 401k retirement account?
"It's not an immediate issue, but over the course of the next two or three months, the economic news is going to bear a lot of watching."
Gearhart says for people who are decades away from retirement, it's not time to offload your retirement account, but for those who are closing in on their golden years, it might be a good time to touch base with a professional to assess options.
"If you're going to retire in 20 or 30 years, you want to stay in the market. However, if you're looking at retiring in the next few years, this is when you have to be very concerned about what your allocation, what your portfolio, looks like, to make sure that you don't have tremendous downside risk, where, if the stock market crashes, then you lose all your money. And that is a much realer possibility today than it was a week ago."
Keep in mind, that none of this is financial advice, and it's not meant to cause panic, but rather keep you informed on what's happened up to this point, as for what's next, we'll keep you updated as this story continues to develop.
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