The U.S. experienced an uptick in GDP growth in the third quarter, but may have ushered in a steep fourth quarter**, casting a shadow over the U.S. economy in recession. GDP growth is expected to turn negative next year. At a time when the outlook is so bleak, Yellen tried to get rid of responsibility, but Powell refused to take the blame. This seems to verify that Fitch and Moody's assessments of the United States are accurate. Let's start by looking at two strange data, both of which are related to the GDP growth rate of the United States, which were released at a similar time, but give opposite trends.
On November 30, the U.S. released a revised GDP for the third quarter, increasing the growth rate from the initial 4.9% to 52%。This means that the US economy grew faster in the third quarter than previously estimated. However, due to 52% is an annualized growth rate, and the actual quarter-on-quarter growth rate is only about 14%。This is a surprising rate of growth among the developed countries of the world. However, the Atlanta Fed then lowered its fourth-quarter growth rate to just 12%。When converted, this actually means that the quarter-on-quarter growth rate in the fourth quarter was only about 03%。The U.S. economy is on the verge of a steep decline. To make matters worse, there could be negative growth not only in the fourth quarter, but even in the first and second quarters of next year, officially declaring the US into a recession.
To further understand the outlook for the US economy, let's take a look at the issues previously pointed out by Allianz's chief economist. He noted that the quarter-on-quarter growth rate in the U.S. in the second quarter was just 21%, while in the third quarter it soared to 52%。Such violent fluctuations are unimaginable, which in itself implies a great deal of chance. He further noted that the current US fiscal deficit is rising, while bankruptcies are on the rise, while inflation remains close to 4%, well above the Fed's target. It can be seen that the US economy is still unable to get out of the predicament of recession.
While spending has been good in recent times, we have also observed that Americans' savings are decreasing. From this, it can be concluded that Americans are constantly depleting their savings, and future consumption will be unsustainable. Without the support of consumption, U.S. economic growth will also disappear. A growing number of economists believe that the U.S. fiscal deficit is a major factor that poses a huge threat to its economy.
Let's look again at the question of the attribution of this responsibility. Not long ago, some experts criticized Yellen for not issuing a large number of Treasury bonds when interest rates were low, resulting in a situation where she has to issue Treasury bonds with high interest rates. But Yellen said she was reluctant to carry the blame. In her view, the fundamental reason for the rising Treasury yields lies in the Fed's interest rate hike policy, and Treasury yields can only fall if the Fed cuts interest rates. However, on Friday, Powell again claimed that a rate cut is not being considered in the short term, and that the Fed will still raise interest rates further if needed. This suggests that there is a disagreement between the two most important economic policy-makers on future economic policy. Yellen wants Treasury yields to fall, while Powell has stressed continuing to raise interest rates;Yellen wants to issue more Treasuries, while Powell insists on shrinking his balance sheet and continues to sell Treasuries. Both Moody's and Fitch have said that internal divisions in the United States have led to a declining ability to govern the economy. And the inconsistencies between Yellen and Powell are a case in point.
As can be seen from the above discussion, the U.S. economy is facing serious challenges. The outlook for GDP growth is bleak, with the possibility of a cliff** and persistent negative growth, signaling a recession. The disagreement between Yellen and Powell shows the instability of US economic policy and the problems of internal governance. At the same time, consumer support is weakening, and it is difficult for the U.S. economy to continue to grow. The increase in the fiscal deficit is also putting enormous pressure on the economy.
However, we must also be aware that economic development is complex and volatile. and central banks need to weigh various factors when formulating policies to achieve stable and sustainable economic development. Under the current circumstances, we hope that various departments can strengthen communication and coordination and formulate more appropriate policy measures to promote the recovery and stability of the U.S. economy. In addition, individuals and enterprises also need to do a good job of their own financial planning, enhance risk awareness and risk resistance.
Overall, we remain cautiously optimistic about the outlook for the US economy. Despite some challenges and uncertainties, the United States, as the world's largest economy, has strong capacity for innovation and resilience. We believe that with the right policies, the U.S. economy will be able to gradually emerge from its predicament and achieve sustainable development.