2018 was a year of significant financial events that had a wide-reaching impact on the global economy. Here are some of the most noteworthy occurrences that shaped the financial landscape in 2018:
- The U.S. Tax Cuts and Jobs Act
One of the most significant financial events of 2018 was the passage of the U.S. Tax Cuts and Jobs Act, which was signed into law by President Trump in December 2017. The new tax law made significant changes to the U.S. tax code, including a reduction in the corporate tax rate from 35% to 21%, a doubling of the standard deduction for individuals and families, and the elimination of certain deductions and exemptions. While the law’s proponents argued that the tax cuts would boost economic growth and create jobs, critics argued that the law would primarily benefit the wealthiest Americans and increase the federal deficit.
- The Trade War between the U.S. and China
Another major financial event of 2018 was the escalating trade tensions between the United States and China. The Trump Administration imposed tariffs on a wide range of Chinese goods, in an effort to reduce the U.S.’s trade deficit with China and address what it views as unfair trade practices. China responded with tariffs of its own, targeting U.S. goods such as soybeans and automobiles. While the tariffs have yet to be fully implemented, they have led to uncertainty and volatility in financial markets, as well as increased costs for businesses and consumers.
- Rising Interest Rates
2018 saw a continuation of the gradual tightening of monetary policy by the Federal Reserve. Throughout the year, the Fed raised interest rates several times in response to a growing economy and increasing inflation. While higher interest rates are typically viewed as a sign of a healthy economy, they can also make borrowing more expensive, which can slow economic growth. Additionally, the rise in interest rates also has an impact on the stock market, with some investors worrying that higher interest rates could make stocks less attractive.
- Volatility in the Stock Market
2018 was also marked by significant volatility in the stock market, with major indices such as the Dow Jones Industrial Average and the S&P 500 experiencing several sharp declines throughout the year. The volatility was driven by a number of factors, including rising interest rates, the trade war between the U.S. and China, and a broader economic slowdown. Despite the volatility, the stock market was mostly positive, overall in 2018.
- Economic Slowdown and Brexit
Economic growth in 2018 slowed down globally compared to the previous year. The economies of several developed nations such as the U.S. and Germany grew at a slower pace, and developing nations such as China also experienced a slowdown. One of the main factors was the trade tensions between the U.S. and China and other global trade issues that weighed on economic growth.
Another major economic event of 2018 was the ongoing uncertainty surrounding the United Kingdom’s withdrawal from the European Union, known as Brexit. Throughout the year, there were several key moments, including the resignation of UK Prime Minister Theresa May, and the ongoing negotiations between the UK and EU leaders, which created uncertainty for businesses and investors.
Overall, 2018 was a year marked by significant financial events, which had both positive and negative effects on the global economy. The U.S. tax cuts and the trade war with China were among the most significant events, but there were many other occurrences including rising interest rates, stock market volatility and economic slowdown. These events had a wide-reaching impact and will likely continue to shape the financial landscape in the years to come.
