The United States declared a GDP of up to 2736 trillion! Soft landing or 2 dilemmas?
How do we respond to the unexpectedly high GDP growth in the United States and the widening GDP gap with China?
However, if we take a closer look at more economic data, it becomes clear that the time has come for the United States to ask itself what to do.
This week, the US officially announced an exciting news: GDP has increased sharply, reaching 2736 trillion! In recent years, the GDP of the United States has grown significantly every year, and the gap with China has opened a big step.
Americans who really understand the economy may be concerned about this, as the GDP of the United States is largely sustained by inflation. Inflation in the United States contributed 38 percentage points, contributing a whopping 7 percentage points in 2022.
The first challenge facing the United States now is how to lower interest rates.
Outside, the Fed will cut interest rates, initially** in March this year, but now it seems that the likelihood of a rate cut in March has been greatly reduced. As the U.S. economic data comes and goes, the Fed is so anxious that it doesn't know if it should cut interest rates.
For example, the latest published PCE index dropped to 29%, which is a very good figure and shows that prices have come down and inflation is under control. If you look at this number alone, the Fed can cut interest rates.
But just recently, the CPI data in the United States increased from 3 last month1% rose to 34%。The economic data is struggling, and the Fed is doing nothing.
The second dilemma from the United States is that corporate performance is starting to diverge significantly, which could mean that the U.S. economy is facing a recession.
The GDP data has been released, which many see as a sign that the US economy has had a soft landing. But economists are also aware that rapid rate hikes in a short period of time could have negative consequences, which will take time to ferment.
After the release of the fourth-quarter earnings report, it is clear that major US banks are facing a deteriorating performance.
JPMorgan Chase & Co. saw its profits decline both sequentially and year-over-year, Bank of America also saw its profits decline sequentially and year-over-year, and Wells Fargo performed slightly better, up 9% year-over-year but down 40% sequentially. Worst of all, Citibank lost 183.9 billion .
The performance of the U.S. tech sector is equally worrying.
The giant Tesla took the lead in announcing its earnings report, and as a result, the gross profit margin fell sharply, and the stock price immediately followed. Subsequently, Intel also announced its earnings report, and its performance in the first quarter of this year was very pessimistic, which also led to a significant increase in the stock price.
We are likely to see more similar results in future earnings data, suggesting that US companies, which have been strong, are now finally feeling the power of the Fed's rate hikes.
These two issues are likely to lead to a significant decline in US GDP growth in the first quarter and beyond, and a so-called soft landing is likely to signal a severe recession.