On September 30th local time, the U.S. Department of Commerce released data showing that the U.S. personal consumption expenditure (PCE) price index in August rose 0.3% month-on-month and 6.2% year-on-year, indicating that there are still signs of worsening inflation in the United States. Feder still has a long way to go before controlling prices. Under the influence of the Federal Reserve's continued radical interest rate hikes in fighting inflation, the problems faced by various sectors of the US economy have also emerged.
U.S. consumer news and business channel (CNBC) reported that the Fed's preferred indicator shows that the US inflation accelerated beyond expectations in August
Inflation indicators valued by the Federal Reserve accelerated upward
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data also shows that after excluding the volatile food and energy prices, the core personal consumption expenditure price index in August rose 0.6% month-on-month, higher than the market expectation of 0.5%, and significantly accelerated compared with the 0.1% increase in July; the core personal consumption expenditure price index in August rose 4.9% year-on-year, higher than the market expectation of 4.7%, and also accelerated compared with the 4.7% increase in July.
analysis believes that as the inflation indicator that the Fed values the most, the latest core PCE data released shows that the inflation rate is still far higher than the 2% long-term target set by the Fed, indicating that inflation pressure has not been effectively alleviated for a long time. The Fed is expected to continue to tighten the monetary policy and once again aggressively raise interest rates by 75 basis points at the next policy meeting held in November.
Vinod Agarwal, professor at Strom School of Business at Odd University (Vinod) Agarwal said in an interview with CCTV reporters on CCTV: "This is exactly the data the Fed is looking at. They don't look at the Consumer Price Index (CPI), they look at personal consumption expenditure (PCE). But that doesn't matter. The fact is that the inflation rate is much higher than what they want to see, and they see that the inflation level in the last month did not fall as expected. They see that the problem of inflation getting out of control is lingering because it is not close to 2%. So, they will continue to adopt very restrictive monetary policies until they see evidence that inflation has dropped to 2%. "
stock markets and property markets have felt the pressure of interest rate hikes in various areas of the US economy, including the stock market and the real estate market.
"Wall Street Journal " reported that the US stock market continues to decline, and investors are troubled by inflation problems
"Wall Street Journal recently analyzed that the Fed's interest rate hike measures will eventually lead to a slowdown in economic growth and may drag down corporate profits. In addition, the market's valuation level has been limited, which means that the US stock market is facing double pressure. Since the beginning of this year, major U.S. stock indexes have continued to fall sharply, with the worst performance in the first nine months since 2002 on September 30. Among them, Dow Jones Index has fallen 21% this year, S&P 500 Index has fallen 25%, and the Nasdaq Composite Index has fallen 32%.
At the same time, the latest survey of lenders released by Federal Housing Loan Mortgage Company (Freddie Mac ) shows that the average interest rate for 30-year fixed-rate mortgage loans in the United States has climbed to 6.7%, the highest level since July 2007, sounding the alarm for home buyers. Just a year ago, the interest rate was only 3.01%. Many analysts pointed out that the U.S. housing mortgage interest rate rose to its highest level in more than 15 years against the backdrop of the Federal Reserve's continued interest rate hikes to control inflation, which undoubtedly added pressure to the already cooled US real estate market.
Rüdiger Bachmann, a professor of economics at the University of Notre Dame, said in an interview with CCTV reporters: "One of the main reasons for negative economic growth is actually the decline in residential investment. Considering the high interest rates in the United States, this is not surprising, and this is exactly what we are seeing.In response to rising federal funds rates, residential investment in the United States is declining as mortgage rates rise. This is predictable based on economics textbooks. ”
From the overall economic operation, the final revised data released by the U.S. Department of Commerce on September 29 showed that the U.S. GDP (GDP) fell by 0.6% on an annualized basis in the second quarter of 2022, which is the same as the previously released correction data, which means that the U.S. economy has declined for two consecutive quarters and fell into a technical recession. So far, many financial institutions have lowered their expectations for the future growth prospects of the U.S. economy and expressed doubts about whether the U.S. economy can achieve a soft landing. (CCTV reporter Gu Xiang and Xu Dezhi)
