Brexit has been all over the news. In case you don’t know, Britain left, or exited, the European Union. Hence the name, Brexit. The stock markets went nuts. Every moaned that the global economy would crumble. There was much wailing and gnashing of teeth.
What does it mean for us though, as American consumers? Will we notice? It is unlikely we will get by without any negative experience, but just as unlikely we will connect any repercussions we do suffer to Brexit. What can we expect?
The average American Joe watching the news may easily become fearful of what is happening in the economy worldwide, including Brexit. Fear means spending less, which results in all kinds of bad things. When Americans stop spending, demand drops, production drops, and then people are laid off. Then there is less money to be spent. It is a vicious cycle.
The Potential for Trade Issues
We may not realize that we are affected by trade issues, but it actually hits us close to home. One of the aftershocks of Brexit is a strong dollar. A strong dollar hurts trade, and when trade, suffers prices rise. When prices rise there can be less spending, and the cycle starts again, just from another point.
The Potential Fewer Jobs
Less spending means less production, which means fewer jobs. A higher unemployment rate means fewer people are getting paid. Thus, not as much money goes back into the economy through spending.
A Change in the Fed’s Plan for Rates
The Fed planned to raise rates at least four times this year. This was in response to a strengthening economy. However, now they are questioning if just once would be better. The idea that Brexit could completely change the Fed’s flight plan when it comes to interest rates is surprising to some, but real just the same.
As Americans, if the country suffers we mostly all suffer in some way. Whether big business, small business, sole proprietor, partnership, employee, or unemployed. The best thing we can do is stick together, support local businesses, and enjoy the freedoms we have.
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