Whether the US economy can achieve a "soft landing" remains to be observed
2024-01-04
In 2023, after the Federal Reserve continued to raise interest rates significantly, the inflation rate in the United States has decreased, and the economy has shown a certain recovery trend. Despite this, the US economy has not escaped the risk of recession due to challenges and uncertainties such as core inflation rates still far exceeding the Federal Reserve's target, the lagging effect of high interest rate policies gradually emerging, and the continuous expansion of federal government debt. It remains to be seen whether a "soft landing" can be achieved. Inflation has cooled down, and in the past two years, high inflation has been one of the biggest challenges for the US economy. The Federal Reserve initiated a rate hike cycle in March 2022 and continued to implement a series of rate hikes and balance sheet tightening actions in 2023 to drive down inflation levels. So far, the Federal Reserve has raised interest rates 11 times, with a cumulative increase of 525 basis points. According to data from the US Department of Labor, in November 2023, the Consumer Price Index (CPI) in the United States increased by 3.1% year-on-year, a significant decrease from the peak of 9.1% year-on-year CPI increase in June 2022. However, the current inflation level in the United States is still higher than the Federal Reserve's target. Especially after excluding volatile food and energy prices, the core CPI in the United States increased by 4.0% year-on-year in November, with little change compared to the previous two months. In mid December 2023, the Federal Reserve held its final monetary policy meeting of the year and announced that the target range for the federal funds rate would remain unchanged between 5.25% and 5.5%. This is the third consecutive time since September 2023 that the Federal Reserve has maintained this interest rate range unchanged. The market generally believes that the current cycle of interest rate hikes by the Federal Reserve may have ended. But Federal Reserve Chairman Powell's statement leaves room for improvement. He recently stated that although the Federal Reserve has made progress in reducing inflation, there is still a long way to go, and the Federal Reserve is cautiously evaluating whether more action is needed. At the same time, the growth of the US job market has slowed down, and the inhibitory effect of high interest rates on the economy is gradually becoming apparent. The data released by the US Department of Labor recently shows that the number of new jobs added to the US non-agricultural sector in November 2023 was significantly lower than the monthly average level in the first half of 2023. The Federal Reserve and some international institutions predict that US economic growth may slow down in 2024. The Federal Reserve recently released its latest economic outlook forecast, raising its 2023 US economic growth forecast by 0.5 percentage points to 2.6% compared to September's forecast, and lowering its 2024 US economic growth forecast by 0.1 percentage points to 1.4%. The World Economic Outlook report released by the International Monetary Fund (IMF) in October 2023 shows that the US economic growth rate is expected to be 2.1% in 2023, and will slow down to 1.5% in 2024. Although the macroeconomic data for 2023 in the United States was better than expected, there is a "temperature difference" between the actual perception of the economy by the American people and the data. Despite the sustained high prices, the middle and low-income groups in the United States still bear a heavy economic burden, and the wealth gap in society continues to widen. According to a recent "U.S. Economic Survey" released by Consumer News and Business Channel (CNBC), 66% of respondents hold a negative attitude towards the current economic situation and prospects in the United States
Edit:GuoGuo Responsible editor:FangZhiYou
Source:gmw.cn
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