Source: People's Daily Overseas Edition
The food counter of a supermarket in New York, USA. Xinhua News Agency reporter Wang Yingphoto
Recently, the U.S. Department of Commerce released data showing that the U.S. GDP (GDP) fell by 0.9% on an annual basis in the second quarter of this year, shrinking for two consecutive quarters.
Generally, an economy can be considered to be in a technical recession if its GDP experiences negative growth for two consecutive quarters. Whether the U.S. economy is in recession or not will ultimately be determined by the National Bureau of Economic Research (NBER). However, Associated Press , Reuters and many other foreign media recently reported that the reality of negative GDP growth for two consecutive quarters has triggered concerns that the U.S. economy may fall into recession.
has fallen into a "technical recession"
The latest data from the U.S. Department of Commerce shows that U.S. GDP fell by 0.9% on an annualized basis in the second quarter of this year, shrinking again after falling by 1.6% in the first quarter. Data show that in the second quarter of this year, personal consumption expenditures, which account for about 70% of the U.S. economy, grew by 1%, and the growth rate slowed down from the first quarter; non-residential fixed asset investment, which reflects the status of corporate investment, was higher than that in the first quarter. dropped sharply; in addition, private inventory investment continued to drag down the economy by 2.01 percentage points in the second quarter after falling in the first quarter.
In response, some US media pointed out that after shrinking for two consecutive quarters, the US economy has fallen into a technical recession.
The US " Newsweek " reported that consecutive quarterly contractions are a typical sign of an impending recession and are often used to define recessions. The report mentioned that the National Institute of Economic Research is responsible for determining whether to enter a recession. The institute defines a recession as "a widespread and significant decrease in economic activity across the economy that lasts for more than several months," but the agency usually waits until months before making a determination.
Before the results of the National Institute of Economic Research came out, the White House responded to the negative economic growth in the second quarter and continued its previous statement, saying that the U.S. economy had never fallen into recession. President Biden , Treasury Secretary Yellen and Federal Reserve Chairman Powell have recently come out to appease the people and deny that the U.S. economy has entered a recession. However, Yellen admitted during a press conference that U.S. economic growth has slowed significantly and that there are "many risks" in the outlook.
"According to data released by the U.S. Department of Commerce, it is a fact that the U.S. economy has fallen into a technical recession. Next, the National Institute of Economic Research will judge the U.S. economy based on a series of indicators such as employment levels, output, income, manufacturing activity, and corporate sales. Whether it has entered a recession. At present, relevant economic data in the second quarter of the United States show that consumption has begun to weaken, and non-residential fixed asset investment and private inventory investment have also shrunk. This shows that the high inflation rate in the United States has affected personal consumption and Corporate investment, structural problems in the U.S. economy are emerging," Chen Fengying, a researcher at the China Institute of Contemporary International Relations, said in an interview with this reporter.
"Nihon Keizai Shimbun " pointed out that in order to avoid being labeled as a policy failure before the mid-term elections in November, senior US government officials firmly denied that the economy was in recession. However, a total of 10 technical recessions have occurred in the United States since 1949, and all of them have since been officially recognized as economic recessions. Many Japanese economists pointed out that U.S. consumer confidence has deteriorated significantly due to soaring inflation. After the Federal Reserve continued to raise interest rates significantly, personal consumption slowed sharply, equipment investment declined, residential investment dropped sharply, industrial production data also showed weakness, and the U.S. economy is cooling rapidly.
Lack of effective institutional restraints
The US " New York Times " report pointed out that regardless of whether the US economy has fallen into recession, it is an indisputable fact that economic growth is slowing down, businesses are struggling, and millions of families are being crushed by prices.
A recent poll jointly conducted by ABC and market research organization Ipsos showed that more than two-thirds of Americans believe that the U.S. economy is deteriorating, reaching the highest level since the survey data was released in 2008. At the same time, the Biden administration's approval ratings continue to decline on a range of related issues.The survey shows that 62% of Americans disapprove of the job the Biden administration is doing in handling the economic recovery, and the Biden administration's handling of inflation is even worse, with 69% disapproving.
"In the first and second quarters of this year, the U.S. economy weakened. In addition to the impact of the new coronavirus epidemic and the Federal Reserve's interest rate hikes and other factors, a more important reason is that the U.S. economy did not experience an endogenous recovery. Previously, the U.S. economy showed a positive trend , mainly relying on the large-scale economic stimulus plan adopted by the Biden administration after taking office. Since the end of 2021, the Biden administration has begun to withdraw from part of the economic stimulus plan, which has had a great impact on the U.S. economy. "China Institute of Contemporary International Relations. Sun Lipeng, associate researcher at the Institute of American Studies, pointed out in an interview with this reporter that the lack of effective constraints on U.S. economic policy is a deep-seated and chronic disease that causes problems in the U.S. economy. Previously, in order to respond to the impact of the epidemic and stimulate a rapid economic rebound, the Biden administration launched an economic stimulus plan of more than 5 trillion US dollars. Neither monetary policy nor fiscal policy was effectively constrained. As a result, a large amount of funds flowed into the market, raising prices and exacerbating inflation. Expanding causes a series of sequelae.
Humphrey Moshi, professor of economics at the University of Dar es Salaam in Tanzania, recently said that the current economic predicament of the United States is due to its own policies and other factors. In order to curb inflation, the Federal Reserve announced at the end of July that it would raise interest rates for the fourth time this year and for the second time in a row by 75 basis points, exacerbating the risk of its own economic recession. On the other hand, the United States takes a negative stance on economic globalization and multilateralism and provokes trade disputes, resulting in high domestic commodity prices and putting pressure on the economy.
also believes that the U.S. economy has not yet fallen into a full-scale recession, mainly due to the fact that the unemployment rate has not risen significantly. This is because there is a time lag in the transmission of monetary policy tightening to the real economy. In the future, as the Federal Reserve continues to raise interest rates and monetary policy begins to exert force, financial conditions will tighten significantly, household demand and corporate investment will tend to decline, and the unemployment rate will also rise.
"In June, the U.S. inflation rate reached as high as 9.1%. Against this background, the Federal Reserve has successively raised interest rates sharply, which will eventually strangle the U.S. economy into recession. Currently, analysts on Wall Street in the United States are generally worried that the U.S. economy will fall into the 1970s. To the 1980s-style 'stagflation'. Historically, under the combination of high oil prices and interest rate hikes, the U.S. economy is almost inevitable. There are many signs that the U.S. economy is only one step away from stagflation." Chen Fengying pointed out. All countries need to be wary of the negative spillover effects of the United States on the global economy. In order to divert domestic people's dissatisfaction with the poor economic situation, the United States may further internationalize domestic problems.
"Tail effect" drags down the world
Recently, many international institutions have lowered their economic growth expectations for the United States. International Monetary Fund (IMF) President Georgieva recently stated that the path for the U.S. economy to avoid recession is narrowing, and the U.S. economy faces serious downside risks this year and next. According to the policy path elaborated at the Federal Reserve's June monetary policy meeting, the IMF lowered its U.S. economic growth forecast this year to 2.9% from 3.7% in April, and its 2023 growth forecast from 2.3% to 1.7%. Georgieva also said that the tightening of monetary policy and slowing economic growth in the United States will have widespread impacts.
"In the short term, taking into account factors such as the mid-term elections, the Biden administration will not control inflation at the expense of economic growth. Therefore, U.S. inflation will hover at a high level for some time to come. The subsequent pace of interest rate hikes by the Federal Reserve may slow down , but it has not yet reached the peak. The tightening of U.S. macroeconomic policies is still the general direction." Sun Lipeng analyzed that the Fed's interest rate hike process will accelerate the return of global capital to the United States, and the resulting secondary risks are worthy of attention, especially in emerging economies. Facing shrinking exports, currency depreciation, capital withdrawal, and intensifying risks of debt crisis.
Joshua Pardeed, chief economist of Indonesian Permata Bank, recently said that against the backdrop of US inflation soaring to the highest level in 40 years, weakening domestic demand is dragging down its economic performance and it is expected that the US economy will be affected in the next 12 years. The performance in March is even worse, which may further drag down the world economy and have a significant impact on emerging economies including Indonesia . Joshua Pardede analyzed that the exports of ASEAN countries such as Indonesia are bound to be affected by the US economic recession. In addition, concerns surrounding the Federal Reserve's interest rate hikes and the U.S. economic recession will also stimulate market risk aversion, leading to capital outflows from emerging economies, thereby triggering debt problems and local currency depreciation . Emerging economies will be forced to introduce various policies to stabilize exchange rates . The Indonesian central bank may raise interest rates in the second half of this year, and raising interest rates will increase the borrowing costs of various domestic departments and institutions, dragging down the Indonesian economy.
"The spillover effect of US macroeconomic policy adjustments is comprehensive. In fact, due to the financial hegemony of the United States, not only emerging economies are unable to withstand the impact, but also developed countries cannot escape the 'tail effect'. At present, many countries have The central bank has to follow the Federal Reserve’s decision to raise interest rates in order to avoid the depreciation of its own currency and prevent capital outflows,” Chen Fengying said.
Japanese media and experts pointed out that the Federal Reserve's aggressive monetary policy has had a negative impact on the world economy. While it has increased import prices and increased debt burdens in emerging market countries, it has also impacted developed economies such as Japan. Since the beginning of this year, the Japanese yen has depreciated sharply by about 20% against the US dollar, further amplifying the impact of rising energy prices on the Japanese economy. At the same time, given that the world economy faces downward risks, the decline in external demand will make the environment for Japan's economic recovery more severe. (Our reporter Yan Yu)
"People's Daily Overseas Edition" (Page 06, August 13, 2022)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-