The U.S. economy performed well in the second quarter, with GDP growing by 24%, more than expected by 18%。There was also positive data for the labor market, with the U.S. Department of Labor reporting that initial jobless claims fell by 7,000 to 22 in the week ended July 2210,000 people. The unemployment rate in the United States was 36%, which is close to record lows.
But many economists around the world are not optimistic, believing that the short-term strength of the US economy is unsustainable, and that the US economy will enter a recession cycle, which may occur in 2024. Their analysis and data all point to a central problem: that Americans' money is getting tighter, and that the U.S. economy is largely dependent on consumption.
During the epidemic, the large-scale fiscal stimulus of the United States has made many people envious. But this kind of thing can only be done by the United States, because the dollar is the universal currency of the world, and the dollar printed by the Federal Reserve has purchasing power, and the depreciation loss of the dollar is borne by the global economy.
The dollar's "blood-sucking power" has made the United States** addicted to the money printing machine, and the main way to solve various economic problems is to print more money. As a result, the U.S. national debt has reached a staggering $32 trillion, and the main task of the U.S. has been to convince the Fed to raise the debt ceiling so that it can print more money. As for the question of the total amount of debt, leave it to the next American ** to have a headache.
When the speed of the printing press far exceeds the rate of global production, an economic term emerges: "inflation". The United States ** sent the freshly printed dollars directly to the general public, and the idea of us Chinese is that suddenly there is an extra amount of money, and the economic situation of the family will definitely improve. But in the United States, where consumption is king, things are not so simple.
According to the Federal Reserve Bank of St. Louis, Americans' personal savings fell sharply to $520 billion in November last year, up from $4.4 in 2020$85 trillion is down 89%. Last year's savings were even lower than pre-pandemic levels.
This is also confirmed by the latest analysis by WalletHub, which states that Americans have reduced their savings by 5% since April 2020 due to rising inflation$5 trillion. Since mid-2021, U.S. inflation has been at an all-time high, with everything from energy to food at all, reaching 9A 40-year high of 1%, which has greatly weakened savings and increased the debt burden of the population.
According to the U.S. Department of Labor, in April 2023, the U.S. Consumer Price Index (CPI) fell by 42%, the highest level since 2008;Core CPI (excluding food and energy) was 3% year-on-year**, the highest since 1996.
In the face of increasing economic uncertainty, Bank of America conducted a special survey on residents' willingness to save and found that 63% of Americans are setting a savings target for 2023, but 77% believe that inflation may become a major problem for saving.
In the first half of this year, the size of deposits in the US banking sector remained in a state of rapid decline. On June 1, the Federal Deposit Insurance Corporation (FDIC) released an assessment report on the U.S. banking industry for the first quarter of 2023, which showed that in the first quarter of this year, total U.S. bank deposits fell by $472 billion, the fourth consecutive quarter of deposit decline in the industry, and the largest decline since the company began collecting quarterly banking data in 1984.
A number of experts have already warned that the US economy will fall into recession. JPMorgan Chase CEO Jamie Dimon said earlier this month that U.S. consumers received 1$5 trillion in excess savings, but inflation is eroding everything, once that 1If $5 trillion runs out sometime in the middle of next year, the economy is likely to "derail".
The money distributed to residents for consumption is almost spent, and the Federal Reserve's efforts to curb inflation by constantly raising interest rates are beginning to appear again, and residents' borrowing costs are increasing sharply in the continuous interest rate hikes.
According to statistics, American consumers will pay $34.4 billion in additional interest expenses over the next 12 months. If they raise rates by another 25 basis points, they will lose another 17$200 million, bringing the total annual cost of the Fed's recent rate hikes to a whopping $36 billion. According to the New York Fed, total household debt was as high as 17 at the end of March$05 trillion, with an increase in the proportion of current debt arrears for most debt types.
A new Federal Reserve survey shows that the overall decline rate for Americans applying for credit, whether it's a mortgage, a new car loan or a credit card, rose to 218%, the highest level since June 2018.
Based on the expected fiscal deterioration and growing debt burden in the United States in the coming years, the international rating agency Fitch downgraded the long-term foreign currency issuer default rating of the United States from AAA to AA+ on August 1, the first downgrade of the US credit rating by a major rating company in more than 10 years.
Fitch said the downgrade reflected a "declining level of governance" in the US relative to other top economies over the past 20 years, and noted the financial uncertainty created by a series of major events in which legislative impasse nearly disrupted routine payments of US Treasuries.