The U.S. economy is reaping the brunt of a soft landing from the perspective of HTFX analysts.
2023 has come to an impressive end to the U.S. economy, and U.S. Treasury Secretary Janet Yellen has overturned many of the previous false assumptions by declaring that the U.S. economy has successfully achieved a soft landing. In this seemingly contradictory moment, HTFX analysts delve into the stellar performance of the U.S. economy and reveal the secret code behind it.
Strong performance of the labor market.
According to the U.S. Employment Report, known as the small non-farm payrolls, ADP, the number of new jobs in private enterprises reached a staggering 16 percent in December last year40,000, exceeding market expectations and setting a record since August 2023. HTFX analysts point out that the core goal of a soft landing is to normalize the labor market that was hot in the past. The slowdown in the pace of wage growth was interpreted as a positive signal in the fight against inflation, which made the normalization of the labor market more impressive.
Distribution of industries for job growth.
Current job growth is focused on sectors such as health care and social assistance, leisure and hospitality, and state and local**. This trend explains why the labour market has remained strong** while hiring pressures have eased. Generous incentives have encouraged more workers to show a willingness to return to the labour market.
Excess savings and assets***
During the pandemic, social distancing measures limited normal spending patterns,** and stimulus packages were injected into the economy, allowing households to quickly accumulate staggering savings in a short period of time. Excess savings play an important role in the U.S. economy, and fluctuations in equity and real estate values have a significant impact on a household's financial well-being.
Past cases of soft landings.
To better understand soft landings, HTFX analysts review the Fed's successful soft landings in 1965, 1984 and 1994. These cases include the adjustment of fiscal policy, the implementation of interest rate cuts, and different strategies for economic recovery, providing readers with a richer historical experience.
Analyze the wrong assumptions of experts.
Although many professional economists and research institutions** The US economy is set to enter a deep recession in 2023, the reality is quite the opposite. HTFX analysts share a few key points for readers:
The key role of excess savings: Before the implementation of the interest rate hike policy, debtors had locked in funds with low interest rates, and the expansion of spending also brought excess savings to households, which, combined with assets***, further boosted people's wealth. This explains why the economy has yet to experience a recession.
Economic Cycle in Special Circumstances: In the special environment caused by the epidemic, the traditional economic cycle** may no longer be applicable. The current trend to ** the future appears to be unreliable in this context.
Impact of Rising Interest Rates on the Real Estate Market: While the rapid rise in interest rates has had a negative impact on the commercial real estate market, the support of the banking sector and other factors have brought hope to the real estate sector.
Mitigation of geopolitical conflicts: Although geopolitical conflicts have been difficult to resolve for a long time, countries in Europe and the United States have developed responses to reduce the impact of economic shocks.
HTFX analysts stressed that an accurate understanding of the economy needs to go beyond the surface and focus on the underlying dynamics. By revealing these hidden codes, investors and policymakers are better positioned to address the challenges and opportunities ahead.