China Daily Online, July 26th "Here we go again. The Fed is expected to raise interest rates again on Wednesday after suspending interest rate hikes last month. " This is USA-Today’s report on July 26th.
The article writes that the Fed will raise the benchmark interest rate by another 0.25 percentage point to the target range of 5.25% to 5.50%, which will be the 11th time for the Fed to raise interest rates and the highest level in 22 years.
The United States cannot curb the spread of inflation for a long time. (Source: Cai Chang English China Daily, April 20, 2023, 8th edition)
WalletHub analysis, since April 2020, due to soaring inflation, American savings have decreased by 5.5 trillion US dollars, to a lower level than before the COVID-19 epidemic. Since mid-2021, inflation in the United States has been at a historical high. The prices of all commodities, from energy to food, have soared, and the inflation rate reached a 40-year high of 9.1% in mid-2022, which greatly eroded savings and increased people’s debt burden.
Professionals believe that consumers will pay $34.4 billion in additional interest fees in the next 12 months. According to the report, if they raise interest rates by 25 basis points, they will lose another $1.72 billion, bringing the total annual cost of the Fed’s recent interest rate hike to as high as $36 billion. According to the data of the Federal Reserve Bank of new york, by the end of March, the total household debt was as high as $17.05 trillion, and the proportion of current debt arrears of most debt types increased.
American investor bill gross warned that Americans may run out of their savings later this year, giving the green light to the economic recession.
Since the Federal Reserve began to raise borrowing costs sharply at the beginning of last year, most economists predicted that this would lead to economic collapse as consumers cut spending, enterprises cut employment and expand their plans.
On July 20th, The Conference Board released a report saying that in June, the "LEI" of the United States dropped by 0.7% to 106.1. This is the 15th consecutive month of decline and the longest consecutive decline since the economic recession in 2008. In addition, the contraction of the index is accelerating, with a total decrease of 4.2% in the first half of this year, which is greater than the decrease of 3.8% in the second half of last year.
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According to a new survey released by the American Business Economics Association, the vast majority of business economists still believe that the possibility of the US economy falling into recession this year is 50%.
Reports issued by major banks, such as JPMorgan Chase, Wells Fargo and Citigroup, said that the US economy may face great challenges in the third quarter due to the upside-down yield curve and the impact of the small bank crisis.
Jeffrey Sherman, deputy to Jeffrey Gundlach, the "new king of debt", and deputy chief investment officer of DoubleLine Capital, said that the market should be prepared for the United States to fall into a serious recession. Many economic indicators he paid attention to either issued a warning or sent a recession signal. It is expected that the Fed will cut interest rates by 1 percentage point in one breath.
BlackRock, the world’s largest asset manager, warned that as the United States faces the risk of roller coaster inflation and unusual "full employment recession", the economy may fall into chaos.
(Compile: Cao Yuanqing Li Haipeng)