REVERE, Mass. — Carmen Lopez may live 200 miles from Wall Street, but she has no choice but to pay attention to Thursday’s stock market downturn.
“Even with working and everything, it’s still very hard to keep up with all of this,” she said. “Every time we come to the supermarket, we have a budget for a week, and every time we’re coming to the supermarket we can see that the prices keep going up.”
At the same time, Lopez is seeing her retirement savings go down.
“Sometimes, I dread looking at my account on a weekly basis because I’m figuring I don’t want to see it go down even more,” she said.
Lopez is hardly alone. Across America, 401Ks and IRAs tanked this week, as President Donald Trump’s tariffs on imported goods went into effect. The president maintains that tariffs will trigger the equivalent of an American economic renaissance. Many economists and labor experts disagree.
“If we think about having a coherent industrial policy, you’d want to have at least some kind of mechanisms in place beyond tariffs for encouraging reinvestment in manufacturing,” said Nick Jurkavich, PhD, assistant professor and associate director of the Labor Resource Center at UMass-Boston. “This might involve policies around government contracts. It might involve certain kinds of tax incentives for various kinds of industries. And I don’t see that coherence coming out of Washington.”
Jurkavich said he’s concerned about the general economy suffering from the tariffs and, in turn, lower-income Americans bearing a disproportionate part of that burden.
“If there are recessions, if there continues to be inflation with prices rising, this is going to hurt working people the most,” he said. “Whether it’s layoffs, whether it’s paying more at the supermarket or paying more for your car or your house.”
There’s also concern lower-income citizens in tariff-targeted countries will suffer more, as their jobs depend on demand from the U.S.
David Shapiro, Regional Director of Wealth at Johnson Brunetti investing in Needham, said the stock market plunge is alarming but not unexpected.
“We’ve had unprecedented growth over the last few years,” he said. “Statistically, this is not unusual. The markets go through cycles. This one’s just driven by specific events in the U.S. economy.”
Shapiro said that as with every stock market downturn, age is a key determinant of how to proceed. Younger investors, he said, can probably afford to ride things out.
“Someone that’s in retirement may be impacted more directly because the tariffs could increase some of the costs of those goods for someone living on a fixed budget,” Shapiro said.
In fact, Forbes reports some of the stocks taking the biggest hits Thursday included retailers selling or dependent on imported goods -- including Target, Best Buy, Dollar Tree, Nike, and Lululemon. Other big losers included Apple, Alphabet, Amazon, and Meta. Tesla also finished down 5%.
Should investment strategies change for those at or in retirement? Maybe. Shapiro said it’s possible some investment portfolios will need adjustment -- especially if the stock market downturns persist. It may be time, he said, for some to diversify into bonds or international investments. It also may be a good time to re-evaluate planned expenditures until the market stabilizes.
History indicates that it could take weeks to months.
The Hartford Fund found that since 1981, the three biggest S&P 500 downturns occurred in October 1987 and on March 12th and 16th, 2020, just after the World Health Organization declared COVID-19 a pandemic. Those one-day losses far exceeded what happened Thursday, when the S&P lost nearly 5% of its value.
The S&P recovered in a matter of weeks after those Covid losses, but it took more than 250 days after the 1987 crash for the market to right itself.
Shapiro said he still thinks the U.S. market is a ‘terrific’ place to invest over the long term.
“When we’re living in it, it feels like the worst thing ever because it’s real,” he said. “But eventually, as time goes on, it’s just going to be part of the story of the U.S. economy.”
For Carmen Lopez, the end of that story can’t come soon enough.
“We’re going to have to make cuts to our weekly budget,” she said. “As to what you eat, what you buy and things like that.”
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