"Fox" recently published an analysis that if the US government does not cut spending as soon as possible, then the US economy will face a catastrophic collapse in the coming months. The United States is on a cliff-ahead path, which could be pushed into the abyss by almost anything, and Biden is still complacent about his "Bidennomics".
America Now: The truth about "Bidenomics"
In order to be re-elected in next year's US election, Biden has created a new brand for himself - Biden Economics, high-profile publicizing the "thriving" of the US economy since he took office.
Biden's proudest "achievement" is the reduction in unemployment and the increase in employment, because the data released by the US government is really "encouraging": in 2022, the unemployment rate in the United States decreased to 3.6%, returning to pre-pandemic levels.
But U.S. government data won't tell you that even people who aren't looking for work don't count as unemployed, let alone that 40 percent of Americans don't count on job unemployment.
How much moisture is this data? Research by the Ludwig Institute for Shared Economic Prosperity, which focuses on low- and middle-income families, found that the unemployment rate in the United States is actually more than 20%!
The US M2 money supply has declined significantly since 2022 and has maintained negative growth for three consecutive quarters since then, which means that the amount of available money in the US is shrinking rapidly. The U.S. money supply has fallen so rapidly only once in a century, in the early 1930s, the height of the Great Depression.
There are slight differences between the present and the Great Depression. During the Great Depression, as the U.S. money supply fell, so did prices. In the United States today, despite the collapse of the money supply, prices are still rising. This is an unprecedented dilemma. More and more Americans are draining their savings and are in debt.
According to the Federal Reserve's survey data, the bottom 80 percent of earners now have less real household savings than they did before the pandemic, and the vast majority of the U.S. is in the low-income group. Even high-income groups are at risk of shrinking savings. The survey shows that in the next 12 months, high-income earners are likely to save below pre-2020 levels.
The combination of rising prices and less available capital has led Americans to become more dependent on credit cards and other forms of consumer debt than ever before. This spring, Americans' overall credit card debt topped $1 trillion for the first record.
If Biden can really create well-being for the United States for "Bidennomics", then perhaps the most beautiful thing he has done is to issue "food stamps" to Americans, much the same as Trump's direct payment operation. Through these short-sighted operations of traditional American "early consumption", the US debt piles higher and higher.
U.S. government spending is expected to reach $6.3 trillion for fiscal year 2023 (October 1, 2022 – September 30, 2023), while government revenue is projected at $4.8 trillion and deficit is $1.5 trillion. So far, the US national debt has set a new record of $33.5 trillion.
False unemployment, higher prices, more spending, less savings, and high debt: this is the true face of "Bidennomics".
America's Past: The warning signs of 34 recessions in the United States have come on red
Economists at the 153-year-old Deutsche Bank recently analyzed the 34 recessions the U.S. has experienced since 1854 and compared them with the current state of the U.S. that the key signals triggering a recession have turned red.
The first signal is a spike in interest rates. Rising interest rates tend to raise borrowing costs for businesses and consumers, putting pressure on economic growth, which often leads to recessions. Deutsche Bank's research shows that since 1854, a 2.5 percentage point increase in short-term interest rates in the United States in 24 months would have led to a recession within three years, hitting 69 percent.
Over the past 18 months, the Fed has raised the federal funds rate by about 5.2 percentage points to curb inflation. Historically, as Deutsche Bank has shown in its research, this has not ended well for the economy.
The second signal is a spike in prices. In June 2022, inflation soared above 9%, a 40-year high, and although it has since fallen back to around 4%, it is still above the normal level of 2%. Deutsche Bank's research shows that since 1854, a 3 percentage point increase in inflation in the United States in 24 months will lead to a recession within three years, with a hit rate of 77%.
The third signal is an inverted yield curve. Typically, long-term bonds yield more than short-term bonds because investors take on more risk by lending for a longer period of time, but sometimes reversals occur, and when short-term bonds end up yielding higher than long-term bonds, this is the yield curve inversion. It feels like demand deposits have higher interest rates than time deposits, which is incredible.
U.S. Treasuries have been inverted since July 2022, and Deutsche Bank says historically it doesn't bode well for the economy. Deutsche Bank's research shows that the U.S. recession hit rate is 74 percent, and if you focus only on the period since the recession of 1953, the hit rate is even higher, 80 percent.
The fourth signal is an oil price shock. Since June, the price of Brent crude has surged about 33 percent to more than $95 a barrel, leading many economists to worry that inflation may be harder to contain than the Fed thinks.
However, the Deutsche Bank study found that oil price shocks are less likely to predict a recession than other macroeconomic triggers, at least in the United States. Deutsche Bank research shows that when oil prices soar 25% in 12 months, the U.S. has experienced recessions 46% of the time. Even if oil prices spike 50% in two years, the probability of a recession is only 48%.
Crude oil has been pegged to the dollar for a long time, is there any harm to the dollar when the price of crude oil is high? High oil prices will not have an impact on the US economy, but soaring oil prices will affect production costs, living costs, and affect the price level, which is linked to the second signal.
America's future: If it doesn't collapse, it will decline
As mentioned earlier, the United States has accumulated a lot of problems, and the traces of the recession have been highlighted again, but this year's economic data in the United States is beautiful, and it seems to avoid the crisis of recession. UBS expects U.S. GDP to grow 2.1 percent this year, in line with the Fed's forecast.
However, the economic outlook for the United States next year is not too optimistic, with UBS expecting U.S. GDP to increase only 0.9% next year and the Federal Reserve slightly more optimistic, expecting growth of 1.5%.
It must be admitted that a superpower with a thick foundation cannot collapse at the same time, and its military hegemony, dollar hegemony, and financial hegemony have not completely collapsed.
As long as these things remain, the United States can continue to harvest wealth from overseas, pass on economic crises, as it has in the past, and then toss the world alive.
However, since Trump took office in 2016, the bipartisan rift in the United States has intensified, just like American society.
When the foundation decays, the lighthouse should collapse.