At the heart of this concern is the sheer scale of exposure, both domestic and international, to American equities. Over the past decade and a half, American households have significantly increased their holdings in the stockmarket… Foreign investors, particularly from Europe, have poured capital into American stocks, while simultaneously benefiting from the dollar’s strength. This growing interconnectedness means that any sharp downturn in American markets will reverberate around the world.
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Read the entire article in The Economist
Gita Gopinath is the Gregory and Ania Coffey Professor of Economics at Harvard University. She was the first deputy managing director of the IMF from 2022 to 2025 and its chief economist from 2019 to 2022.