The GDP of the United States exceeded $7 trillion in the first quarter, and the gap widened?

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2024-04-26 21:33Published in Guangdong

The U.S. economy has been collapsing for several years, is it finally going from prosperity to decline?

On April 25, the United States released economic data for the first quarter, with GDP growing at an annualized rate of 1.6% month-on-month, far below market expectations of 2.4% and the lowest level in nearly two years.

After the release of the data by the United States, the domestic media was again bearish, and the self-media cheered, saying that the US economy could not bear it. Since the pandemic, there have been many such voices. In terms of annualized quarter-on-quarter growth, in the first and second quarters of 2022, the United States had negative growth for two consecutive quarters, and the media also said that the U.S. economy was heading for a recession.

When will the U.S. economy collapse? I don't know, but a lot of people are waiting. The growth rate of 1.6% is indeed not high, but if it is converted into the domestic year-on-year growth rate, then the GDP of the United States in the first quarter increased by 3%, exceeding market expectations and still a very good growth rate.

Comparing GDP again, the gap between China and the United States seems to have widened. In the first quarter of this year, the GDP of the United States was $7.07 trillion and that of China was $4.17 trillion, widening the gap from $2.39 trillion last year to $2.76 trillion this year. China's GDP in the first quarter of last year was equivalent to 63.5% of that of the United States, but this year it fell to 59%, falling below 60%.

Obviously, the mainland's growth rate reached 5.3 percent in the first quarter, which was much higher than that of the United States, but why did the gap widen? This is a commonplace question, mainly due to the impact of exchange rates and commodity prices.

In the first quarter of this year, the renminbi depreciated again, with an average exchange rate of around 7.1 with the US dollar, compared with about 6.84 last year. Therefore, when the mainland's GDP in the first quarter is converted into dollars, it has dropped sharply. In dollar terms, the mainland's GDP growth rate in the first quarter was only 0.2%.

In addition, the GDP announced is nominal GDP, we have to look at the nominal growth rate, the nominal growth rate of the United States in the first quarter was close to 6%, and the nominal growth rate of China was 4.2%, which is lower than the nominal growth rate of the United States.

Nominal GDP is a price factor, so whoever has high inflation will have high prices, and nominal GDP will be high.

In the first quarter of this year, inflation in the United States remained high, with the personal consumption expenditures price index rising by 3.4% annualized from the previous quarter, also hitting the highest growth rate in a year. The Fed's most important inflation measure, the core personal consumption expenditures price index, rose by 3.7%. The US CPI rose 3.5% year-on-year in March, the highest since September last year.

For example, if you consume the same amount of goods, the unit price was 10 yuan before, but now it is 15 yuan, and the final consumption amount will rise sharply.

In the years since the epidemic, the annual increase in US GDP has been close to 2 trillion US dollars, and the growth is very terrifying, in fact, it is all caused by high inflation.

So, this is still the case in the first quarter of this year. At a rate of 1.6 percent, U.S. net exports dragged GDP down by 0.86 percentage points, which means a drag, but private consumption contributed 1.68 percentage points. It seems that consumption in the United States is still strong, but as mentioned earlier, the personal consumer price index in the United States has risen sharply, and this is a false prosperity.

After raising interest rates for so long, inflation still hasn't come down, and it seems that there is no hope of cutting interest rates this year.

The United States is constantly overdrawing consumption, and the U.S. debt is about to exceed $35 trillion. The debt is piling up, so U.S. Treasury Secretary Janet Yellen has just left on the front foot, and Secretary of State Blinken is here again. In January and February of this year, we sold off US Treasuries.

However, the more difficult the US economy is, the more it will go crazy to divert contradictions and try its best to curb the development of other countries. So, we seem to see more and more repressive measures against us by the U.S. government.

This year, the external environment is still not very good, so we have to focus on the internal and start with consumption. It is understood that in the first quarter of this year, the contribution rate of consumer spending to GDP was 73.7%, which is still quite good.

For the GDP gap between the two countries, don't worry too much, the exchange rate and prices are fluctuating, once the RMB appreciates, inflation returns to normal, then the GDP gap between the two countries will shrink rapidly, the most important thing is to look at the actual GDP growth rate, this is the key indicator to open the gap.

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