A heavy atmosphere hangs over our economic sky. Is the United States, once the engine of the world economy, now mired in a decline in purchasing power?This begs the question, what causes this phenomenon?Is it the natural cycle of the market, or is there a deeper reason?
We've heard of "quantitative easing", so is this a signal to "release water" ahead of schedule?
First, the economic fog.
With the volatility of the global economy, the state of the U.S. economy seems to be entering a difficult fog. At the heart of this fog is the purchasing power of consumers – one of the key drivers of economic growth.
Reports and data show that the purchasing power of the world's largest economy is experiencing a significant decline. What we need to consider is the change in income level. While average wages have increased in recent years, this growth has not kept pace with the cost of living.
Soaring housing prices, rising health care costs, and rising spending on education are all eroding the real purchasing power of the average American family. This situation goes some way to explaining why many Americans feel that their economic situation has not improved with the macroeconomic recovery.
Also note the changes in the credit market. Credit is an integral part of the modern economy, influencing the purchasing and investment decisions of consumers and businesses. In recent years, despite the low interest rate policy implemented by the US Federal Reserve System, this does not mean that loans are easily accessible to everyone. The credit crunch and rising borrowing standards have made it difficult for some potential consumers and small business owners to access the necessary financial support.
Let's look at the impact of inflation. While inflation has been at relatively modest levels over the past few years, certain key areas*** have put significant pressure on household budgets. The increase in the cost of food, energy and housing, especially in urban areas, has far outpaced the increase in the income of the average wage earner.
In addition to this, the uncertainties of the global economy must also be taken into account. International tensions, geopolitical conflicts, and instability in the global chain have all had an impact on the U.S. economy. These factors have affected not only the export market, but also the domestic investment and employment environment.
We cannot ignore the impact of technological advances on the job market. While technological innovation has provided a fuel for economic growth, it has also led to the loss of jobs in certain industries. The development of automation and artificial intelligence is changing the structure of the labor market, which is a huge challenge for workers who do not have their skills updated in a timely manner.
The decline in purchasing power in the United States is the result of a combination of economic factors. Every level, from the micro-household economy to the macro-global trends, has had an impact on the issue. Tackling this problem will require policymakers, businesses and consumers to work together to find balanced and sustainable solutions.
Second, is the "water release" strategy an emergency or a long-term effect?
Quantitative easing (QE), commonly known as "water release", has been an important word in U.S. economic policy in recent years. But is this strategy really a panacea?Before it works, we need to understand the nature of QE and how it works.
Quantitative easing is the process by which banks buy bonds and other financial assets with the aim of increasing liquidity in the banking system and encouraging banks to lend, thereby stimulating economic growth. In times of recession or low growth, when traditional interest rate adjustments may no longer be able to stimulate the economy further, quantitative easing becomes an alternative tool.
The short-term effects of the "release water" strategy are clear. By increasing the amount of money, it can reduce the cost of borrowing and stimulate consumption and investment, thereby supporting economic growth. For example, after the 2008 financial crisis, the United States succeeded in stabilizing financial markets and restoring economic growth through quantitative easing.
However, the long-term impact of QE is a question worth pondering. A prolonged period of low interest rates and high liquidity could lead to asset bubbles. **Bubbles can emerge in areas such as the housing market due to over-investment, and these bubbles can cause significant damage to the economy when they burst.
A long-term "water release" could lead to inflation. While inflation in the U.S. is currently under control, excess liquidity could eventually push the boundaries and affect consumers' purchasing power.
Quantitative easing could adversely affect income distribution. Increased liquidity is first and foremost good for asset markets, which means that people who own ** and property will benefit first, and this is usually the higher income group.
For low-income groups who have little or no ownership of these assets, they will not only not be able to enjoy the dividends of asset appreciation, but may also face an increase in the cost of living.
QE could also lead to instability in global capital flows. Due to the global influence of the U.S. economy, changes in its monetary policy may trigger a reallocation of global capital, affecting the financial markets and exchange rates of other countries, which in turn will affect the stability of the global economy.
The "release of water" strategy can indeed be used as an emergency measure in the short term to ease the pressure of the economic recession. But in the long run, its *** and risks cannot be ignored. Policymakers need to find a balance between stimulating the economy and preventing risks.
This is not only a question of monetary policy, but also a broader issue of sustainable economic development and social equity.
When it comes to the current state and future of the U.S. economy, we must recognize that there are no easy answers. Every "water release" is a gamble, and every policy adjustment is full of variables. But it is these challenges and uncertainties that make up the reality of the economy.