The biggest reason why the Federal Reserve continues to raise interest rates - suppressing inflation, was frequently slapped in the face by the latest economic data of the United States.
The latest data released by the U.S. Department of Commerce on September 30 local time showed that the U.S. personal consumption expenditure (PCE) price index in August rose 0.3% month-on-month and 6.2% year-on-year, and the year-on-year increase has been above 6% for eight consecutive months.
Reuters report screenshot
Although the Fed repeatedly used a big move to raise interest rates, the historic high inflation in the United States is still continuing.
All sectors of the United States have been dissatisfied with the Federal Reserve's radical interest rate hike policy for a long time, and ordinary people in the United States have suffered greatly.
The US economy has many problems, seriously affecting American lives
The Federal Reserve recently announced a 75 basis point rate hike. This is the fifth rate hike of the Federal Reserve this year and the third time it has raised a significant rate.
The Federal Reserve has repeatedly raised interest rates in the name of suppressing inflation. However, the high prices cannot be controlled, which also affects the investment, stock market and real estate markets in the United States.
Morgan Stanley executive Brian McDonald recently revealed that employees are reducing their savings plans every year, and as costs such as rent and tuition rise, saving for long-term goals may be more difficult.
Bryan McDonald
Inflation is high, and ordinary Americans have deep pain for this.
New Jersey resident George Flores said in an interview with the Central Station that the prices of "being on the Rockets" are unbearable. "The prices of food have increased, and even potatoes are rising. Electricity and natural gas prices are also rising."
George Flores
The Guardian reported that the Federal Reserve has continued to raise interest rates significantly, which will harm the vulnerable people in the United States.
The report said that the Fed's decision has cost Africans, Latinos, less educated groups, unemployed groups, etc.
The Guardian report screenshot
The prospects for the US job market are also bleak.
Time magazine quoted a latest report saying that if the Fed insists on trying to reduce high inflation through "sharp drugs" such as continuous interest rate hikes, it will cause at least 1.2 million Americans to lose their jobs.
article also stated that in addition to minorities and employees with low education, workers in front-line service industries such as manufacturing or construction are also greatly affected by the "unemployment wave".
Time magazine website report screenshot
The Wall Street Journal previously predicted that the Fed's interest rate hike will eventually lead to a slowdown in economic growth and may drag down corporate profits, putting US stock markets under tremendous pressure.
"Wall Street Journal" report screenshot
Since the beginning of this year, the three major U.S. stock indexes have continued to fall sharply, among which the Dow Jones Index has fallen by 21% this year, the S&P 500 has fallen by 25%, and the Nasdaq Comprehensive Index has fallen by 32%.
In addition, survey data from the American Association of Individual Investors showed that in the week ending September 28, the proportion of individual investors who felt pessimistic about short-term market trends was 60.8%, close to an all-time high, the first time since the data was released in 1987 that pessimistic expectations exceeded 60%.
Financial consulting agency "Looking for Alpha" website report screenshot
Another analysis article in the Wall Street Journal pointed out that in the context of high inflation, the US retail industry also faces huge challenges: finding a balance between consumers' expectations of discounts and rising prices to offset the impact of high inflation.
Screenshot of the Wall Street Journal report
Inflation is high, life is difficult, and the freezing three feet is not a day's cold.
The Federal Reserve's policies have frequently misjudgmented and deviated in recent years.
The Capitol Hill report believes that according to the monetary policy transmission effect theory, the prices of services and commodities will not drop for a period of time after interest rates are raised, while Fed Chairman Powell, who frequently raises interest rates, lacks patience and must quickly achieve the target of inflation below 2%. However, it backfired.
article said that this is the third time the Federal Reserve under Powell has made a mistake in monetary policy in recent years:
The first time was in 2019, when the Federal Reserve tightened its monetary policy too early;
The second time was during the COVID-19 epidemic, when the Federal Reserve flooded the market and failed to hold it in time, resulting in the surge in inflation today;
The third time was that since this year, the Federal Reserve overreacted, several times of hikes of interest rates, and promised to raise interest rates in the foreseeable future.
Screenshot of the Capitol Hill report (the title picture is Powell)
Many financial institutions around the world have lowered their expectations for the US economy
The Federal Reserve has aggressively raised interest rates, which is regarded by major institutions around the world as the biggest potential risk of the US economy.
The economy is about to decline, which is considered to be the price the United States must pay for its irresponsible policies.
Forbes magazine website: According to the final revised data released by the U.S. Department of Commerce on September 29, the U.S. GDP fell by 0.6% on an annualized basis in the second quarter of this year; in addition, the U.S. economy shrank by 1.6% on an annualized basis in the first quarter of this year, which means that the U.S. economy has declined for two consecutive quarters and fell into a technical recession.
Goldman Sachs has lowered its expectations for US economic growth in September, citing "a higher interest rate path combined with the recent tightening of the financial environment means that economic growth and employment prospects will deteriorate to some extent next year."
Bloomberg report screenshot
International rating agency HP Ratings Company also previously expected that under the rapid rate hike, the US economy will fall into a moderate recession in mid-2023.
In addition, Deutsche Bank, the International Monetary Fund, the World Bank and the OECD also hold similar views.
Financial consulting agency "Looking for Alpha" website report screenshot
CNN recently reported that the Federal Reserve raised interest rates, and other countries and regions such as Switzerland, the United Kingdom, Norway, and Indonesia had to deal with higher interest rate hikes, so US inflation can be transferred to other countries.
report quoted experts as saying that the Fed's round of interest rate hikes showed the "strongest and most aggressive" attitude since the 1980s, which had a negative impact on world economic growth.
CNN report screenshot
material source丨Global Information Broadcast "Global Deep Observation"
reporter丨Liu Peng
Source: CCTV News Client
