Per Editor: Bi Lu Name
According to CCTV news on the 25th, local time on October 24, US Treasury Secretary Yellen said in a speech in New York that the current surge in energy prices and the intensification of volatility in the global financial market may cause instability in the US financial market. Yellen said the Treasury is closely monitoring possible "risks" to the financial system.
U.S. Treasury Secretary Janet Yellen. Image source: Xinhua News Agency
On October 20, local time, the Conference Board said that the Leading Economic Index fell 0.4% in September to 115.9. The US Leading Economy Index fell by 2.8% in the seven months from March to September 2022.
According to CCTV news reported on the 19th, a number of US media and international rating agencies have warned in recent days that due to the Fed's continuous aggressive interest rate hike policy, the risk of recession in the US economy in the next year is rising.
The model deduction results released by Bloomberg on the 17th local time show that the probability of a recession in the United States in the next 12 months is 100%, that is, a recession is inevitable. When Bloomberg last predicted, the probability was still 65%. According to the Wall Street Journal, the probability of a recession in the United States in the next year is 63%. In addition, the international rating agency Fitch also warned on the 18th that the US economy may fall into a moderate recession from the spring of 2023, and the company also lowered its economic growth forecast for the United States next year to 0.5% from 1.5% previously.
It is worth mentioning that 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 U.S. remains vulnerable to supply shortages. As a former Fed chair, Yellen agreed with the Fed's third mega-hike and hinted at more large rate hikes by the end of the year. The Fed's ultimate goal is to bring inflation down to 2 percent, and Yellen is skeptical that it will meet its target next year.
According to Xinhua News Agency on October 8, the latest industry data in the United States show that with the Fed's aggressive interest rate hike to push up mortgage interest rates, the monthly housing price level in the United States has fallen continuously, and the real estate market "high fever" that has lasted for more than 2 years has cooled significantly.
Market participants believe that the US real estate industry is becoming an important observation indicator of the effect of the Fed's monetary policy changes. Since the second quarter of 2020, house prices have risen sharply, driven by massive stimulus measures in the United States, fueling inflation; Now under the pressure of aggressive interest rate hikes, the housing market has cooled significantly, which is expected to significantly drag down the performance of the US economy.
U.S. home mortgage rates rose sharply due to aggressive interest rate hikes by the Federal Reserve, and the U.S. home price index ended its 31-month straight month-on-month increase in July.
Image source: Xinhua News Agency
According to survey data released by Freddie Mac, the federal residential mortgage company, the US 30-year fixed-rate mortgage rate was 6.02% in the week ended September 15, well above the 2.86% in the same period last year and reaching the highest level since the end of November 2008.
According to data released by the National Association of Realtors, in the case of detached houses, the monthly payment after a 20% down payment as a percentage of the average monthly household income has nearly doubled in the past two and a half years. As of July this year, U.S. existing home sales have fallen for six consecutive months.
According to data released by the Federal Housing Finance Administration, although the US house price index rose by 16.2% year-on-year in June this year, it only rose by 0.1% month-on-month, significantly lower than market expectations of 0.9%.
According to a monthly research report released in September by Black Knight, a US data analysis service, the US house price index ended its previous 31-month consecutive month-on-month increase in July. Data from Zillo Real Estate, an online real estate service provider, showed that U.S. home prices fell again month-on-month in August, the largest month-on-month decline since 2011.
The latest report from Redfern, a U.S. real estate brokerage platform, showed that in the month ending Sept. 4, the final selling price of a home in the United States was 0.3% less than the initial listing price, which is the first time in a year and a half that the final price of a home is lower than the initial listing price. The latest data released by the US Department of Commerce on September 20 showed that after seasonal adjustment, the annual rate of private new housing construction in the United States in August was 1.517 million units, a month-on-month and year-on-year decrease of 10% and 14.4%, respectively, and the upstream cooling of the US housing market was obvious.
Image source: Xinhua News Agency
Market participants expect that the correction of the US housing market is inevitable, and related economic activities have cooled, which is bound to drag down economic performance. Craig Lazara, general manager of S&P Dow Jones Indices, said that the growth rate of US home prices has slowed for several months, and the real estate market may continue to decline as the challenges of the macroeconomic environment intensify.
Capital Economics macroeconomist Sam Hall expects U.S. home prices to fall by 5% year-on-year by mid-2023. Goldman Sachs expects U.S. new home sales and existing home sales to fall 22 percent and 17 percent, respectively, this year. The housing sector's overall contribution to U.S. GDP will decline this year and next.
Danielle Hale, chief economist of the US online real estate rental and sales platform Real Estate Network, said a few days ago that the Fed has not ended the interest rate hike process, and its impact on the economy has not ended. The U.S. economy will run in the coming months full of volatility, most likely into 2023.
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