Per Editor: Bi Lu Ming
According to CCTV News on the 27th, on September 26, local time, former White House economic adviser Steve Moore said in an interview that with the Fed raising interest rates sharply, the risk of world recession has increased greatly, and the US economy is facing huge problems, and it is difficult to find a solution.
Moore said the Fed and the U.S. government misunderstood inflation last year. They said inflation was temporary, but the truth is that it is deeply rooted. Moore argues that the U.S. government's reckless injection of trillion-dollar liquidity into the market is the main culprit in inflation.
According to the ABC local time reported on September 24, the Federal Reserve's move to raise interest rates sharply to curb inflation will lead to a surge in the number of unemployed people in the United States before the end of next year. The Fed predicts that by the end of 2023, the U.S. unemployment rate will rise to 4.4 percent from the current 3.7 percent. Experts say the result will add about 1.2 million unemployed people. On the 21st local time, the US Federal Reserve announced that it would raise the target range of the federal funds rate by 75 basis points to between 3% and 3.25%. This is the fifth rate hike the Fed has raised so far and the third consecutive 75 basis point hike.
Traders work on the New York Stock Exchange on August 26. Image source: Xinhua News Agency
According to CCTV News reported on the 23rd, on September 22, local time, US Treasury Secretary Yellen said that she believes that the high inflation rate in the United States will decline next year, but warned that this prospect is risky. Yellen noted that the United States remains vulnerable to supply shortages. As a former Fed chair, Yellen said she agreed to the Fed's third super-massive rate hike and hinted there would be more sharp rate hikes before the end of the year. The Fed's ultimate goal is to cut inflation to 2 percent, and Yellen is skeptical that he will be able to meet that goal next year.
U.S. Secretary of the Treasury Yellen. Image source: Xinhua News Agency
According to Xinhua News Agency reported on September 1, in response to the new trends in the US economic field and the policy signals of the US Federal Reserve, a number of economists recently said that the US economy continues to face multiple troubles, and the economic decline may continue to last for a longer period of time in 2023.
The British media recently released a survey showing that the US real estate prices are seriously overvalued, coupled with the rising mortgage interest rate, the real estate growth rate will seriously slow down. As an important part of the economic field, the pressure on the US real estate market has aroused concern, and analysts believe that the US economy may fall into a serious recession.
Reuters recently reported that a survey of dozens of real estate analysts showed that the current housing prices in the United States are significantly higher than reasonable. Many analysts interviewed said that due to the Fed's aggressive interest rate hikes, mortgage interest rates have risen accordingly, coupled with the decline in consumer purchasing power, the slowdown in the real estate industry is inevitable.
Analysts believe that the signs of a decline in the real estate industry are only the "tip of the iceberg" of the US economic problems. Stephen Roach, a senior researcher at Yale University, believes that the current economic performance of the United States shows that there may be a more serious economic downturn in the future, even continuing into 2024. If the United States wants to avoid recession, it needs "a miracle."
Customers shop at a supermarket in Millbrae, California, on Aug. 10. Image source: Xinhua News Agency
Steve Hank, professor of economics at Johns Hopkins University in the United States, pointed out in an interview with the media a few days ago that since the outbreak of the new crown epidemic, the United States has experienced a "big release" of money supply, resulting in inflation. Hank said the high inflation the U.S. is currently facing will continue into next year or even the year after.
At this stage, the Fed is carrying out a wave of aggressive rate hikes. Recently, some Fed officials said that the benchmark interest rate will continue to increase and will remain at a high level next year. Fed Chairman Jerome Powell said in a public event on August 26 that the Fed will firmly fight high inflation, releasing hawkish signals that interest rates will continue to raise interest rates in September, and saying that this will bring "pain" to the economy.
Powell also said that U.S. inflation is at an all-time high and that the Fed will use policy tools to fight inflation vigorously. Monetary policy measures taken to reduce inflation could lead to a decline in economic growth and a weak job market. Experts from many countries pointed out that the current challenges facing the US economy are mostly due to their own factors, including monetary policy, and its spillover effects will drag down the global economic recovery and bring severe challenges to developing countries and emerging economies.
Daily Economic News Comprehensive CCTV News, Xinhua News Agency
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