On May 28, Eastern Time, the United States released April inflation data. The core personal consumer price index hit a new high since July 1992, further indicating that inflationary pressure in the United States is high.

On May 28, Eastern Time, the United States released April inflation data. The core personal consumer price index (PCE) hit a new high since July 1992, further indicating that inflationary pressure in the United States is high.

Former U.S. Treasury Secretary and senior economist Lawrence Summers said that restrictions on loose economic measures should be taken immediately, otherwise severe inflation will be triggered.

Even so, Biden has launched another US$6 trillion economic budget plan, which will bring the US federal fiscal expenditure to the highest level since World War II, and will bear a fiscal deficit of more than 1.3 trillion US dollars in the next ten years.

U.S. stocks broad market gains continued on Friday, with the three major stock indexes closing slightly higher, the Dow rose 0.19%, the Nasdaq rose 0.09%, the S&P 500 index rose 0.08%.

Source: wind

The United States wants to increase its "water release"

The core inflation indicator of the United States hit a new high again in April.

According to statistics from the U.S. Department of Commerce, the U.S. PCE price index rose by 3.6% year-on-year in April, a significant increase from the previous value of 2.3%, the fastest growth rate since 2008, and much higher than the Federal Reserve 's official inflation target of 2%.

After excluding volatile food and energy prices, the U.S. core PCE price index rose 3.1% year-on-year in April, a significant increase from the previous value of 1.8%, and hit a new high since July 1992. After the release of

data, spot gold continued its upward trend and went higher in the short term. As of the close, the August gold futures price, the most actively traded in the New York Mercantile Exchange gold futures market, rose $6.8 from the previous trading day to close at $1,905.3 per ounce, an increase of 0.36%.

Market analysts believe that poor economic data was the main reason for the rise in gold prices that day.

It is worth noting that US President Biden officially announced the first budget proposal of his presidency on Friday, which is to apply to Congress for the federal government to spend US$6 trillion in the 2022 fiscal year, which starts in October this year. By 2031, it will Total spending increased to $8.2 trillion, mainly for upgrading U.S. infrastructure and significantly expanding the social safety net.

According to the budget plan disclosed in advance by the media on Thursday local time, the U.S. deficit will account for GDP in fiscal year 2022. The proportion will reach 7.8%, and the debt will account for 111.8% of GDP. The unemployment rate is expected to be 4.1% in 2022, and inflation will remain around 2% for several years.

Some analysts pointed out that this plan will bring U.S. federal fiscal expenditure to the highest level since World War II, and at the same time, the deficit will exceed 1.3 trillion US dollars in the next ten years.

In addition, the total amount of debt held by the public will exceed the total economic output. By 2031, the U.S. national debt will reach $39 trillion, accounting for 117% of GDP.

Plans to increase spending through tax increases

So the question is, where will the money come from?

The budget shows that in order to fill the funding gap, Biden plans to increase taxes on companies and high-income earners to reduce the deficit, that is, to increase the minimum tax rate for domestic companies in the United States from 21% to 28%, and to increase the minimum tax rate for multinational companies operating in the United States from 10.5%. % increased to 21%. In addition, Biden also proposed to increase the tax rate for the richest people to 39.6% and strengthen IRS enforcement.

According to US media estimates, if the above plan is implemented, the US government's annual expenditures in the next 10 years will be close to a quarter of the total US economic output.

The plan triggered strong criticism from U.S. Republicans, who said it would burden the U.S. economy with dangerous debt levels, and the high spending would burden future generations with interest for decades and jeopardize their future.

Former U.S. Treasury Secretary warned of serious inflation risks

U.S. media said the budget proposal shows that the Biden administration is not worried about rapid inflation in the economy. Although data shows growing inflationary pressures in the United States, the White House insists that this is only a temporary result of the economic restart, blaming the signs of inflation on logistics issues such as shortages and supply chain bottlenecks.

According to media reports, former U.S. Treasury Secretary and senior economist Lawrence Summers said that Biden’s budget is based on outdated economic forecasts and may bring the risk of overheating of the U.S. economy.

Summers said that real economic activity is stronger than some forecasts in the budget. For example, the 10-year U.S. Treasury bond yield has exceeded the 1.2% assumed in the budget. Biden's budget forecasts economic growth of 5.2% this year, lower than the 6.5% median estimate of economists surveyed by the media.

Summers hopes the Biden administration will secure needed tax increases, lengthen the spending cycle and roll back previous funding for state and local governments.

According to CCTV, Summers also recently said that the current fiscal policy is loose and radical, and the Federal Reserve maintains a loose monetary policy, which puts the United States at great risk of inflation. Although he supports U.S. President Biden's decision to raise the minimum wage, at the same time, the United States is printing money, issuing national debt, and borrowing on an unprecedented scale. Related decisions will cause the dollar to fall and translate into inflation. In addition, he pointed to evidence of labor shortages, wage increases, and price increases that are far greater than expected in the United States.

This article comes from China Securities Journal