The August non-farm payrolls report released by the United States Department of Labor on the 6th local time showed that although the United States unemployment rate fell slightly to 4.2% from 4.3% last month, the number of new non-farm payrolls was only 142,000, significantly lower than expected, and the previous value was also revised sharply downward.
Screenshot of the Reuters report
Following the release of the report, the market's expectation of a 50 basis point rate cut by the Fed this month increased to 55% from 50% previously.
United States screenshot of the report on the "Market Watch" website
Expectations of interest rate cuts have risen at a time when fears of a recession in the United States have intensified.
A large number of analysts believe that due to factors such as the weak job market and the increase in household debt, a further slowdown in United States economic growth has become a high probability event.
"We are less and less likely to achieve a soft landing"
The unemployment rate is a more intuitive indicator of a recession. When the unemployment rate continues to rise for a certain period of time, and the magnitude exceeds a certain limit, the economy is considered to have entered a recession.
Since the beginning of this year, the unemployment rate in United States has risen for several months, and the number of new non-farm jobs has been revised sharply downward several times, raising deep doubts in the market about whether the United States economy can achieve a soft landing.
Diane ·Swank, chief economist of KPMG's United States division, believes that the current weakness of the United States labor market is getting closer and closer to the performance of the recession.
Swank: "United States job growth in August was mainly led by hiring in the health care and social assistance industries, government employment and leisure and hospitality employment also increased. But that's exactly the problem. As of the end of July, the number of job openings in these three industries had fallen significantly and they were not interest rate sensitive, so it is clear what their future employment momentum will be. This also means that a soft landing for the United States economy is becoming less and less likely. ”
Data map: Diane · Swank
Kevin · Mahan, chief investment officer at Henion and Walsh Asset Management in United States, specifically mentioned that the rising household debt in United States amid a weak job market will have a continued negative impact on personal consumption, thereby dragging down economic growth.
Mahan: "Considering that personal consumption expenditures account for about 70 percent of the United States economy, if consumers start to rein in their spending because they lose their jobs and use their income to pay off personal debt, the economy will only slow further." ”
Data map: Kevin · Mahan
In addition to the lower-than-expected number of new non-farm payrolls, the United States manufacturing purchasing managers' index has fallen below the "boom and bust line" for five consecutive months.
In addition, according to the Federal Reserve's recent report on the national economic situation, only 3 of the 12 regions saw a slight increase in economic activity, while the number of regions with flat or declining economic activity increased to 9 from 5 in the last report.
These data confirm the possibility of a further slowdown in United States economic growth or even a recession.
Screenshot of the report of Turkey's Anadolu News Agency
David · Rosenberg, an economist at Rosenberg Research in United States, listed 20 indicators of a United States recession in a report late last month. According to his analysis, nine of them have been triggered, which means that "the probability of a recession in the United States is rising."
In fact, the number of recession signals in the United States economy has been increasing for nearly two years, with only 10% triggered in 2022 and rising to about 25% in 2023 and the first half of this year. Since then, the rate has accelerated until it has now reached 45%.
Screenshot of the report of the United States "Business Insider" website
"The economic development model of the United States is undergoing a qualitative change"
Typically, the Fed's monetary policy goals can be reduced to a "dual task" of "maintaining price stability" and "achieving full employment" to avoid a recession in the United States.
And JPMorgan Chase CEO Jamie · Dimon has been warning of recession risks in the United States economy since 2022.
In an interview with US media last month, he said that his view on the possibility of a recession is "the same as before".
Dimon: "There's a lot of uncertainty in the United States economy right now. Factors such as geopolitics, housing costs, government deficits, presidential elections, etc., can cause panic in the market. Based on the United States' future massive spending on things like the green economy and military expansion, I'm a little skeptical that the Fed can bring inflation down to its annual target of 2%. ”
Data map: Jamie · Dimon
Analysts generally believe that the current United States economy is facing three problems that need to be solved: first, some people cannot make ends meet; Second, the ratio of housing prices to income is too high, and the transaction volume has dropped significantly; Third, the stock market is overvalued. In addition, the United States has a serious debt problem with unsustainable debt levels.
Other experts point out that the current signs of weakness in the United States economy are very similar to those before the recession in 2007, including the same number of indicators that indicate the risk of a downturn: declining housing transactions, pressure on household budgets, and a lot of hot money flowing in the market......
According to the latest Financial Stability Report released by the Federal Reserve, 72% of respondents believe that the United States currently faces risks in the fight against inflation and monetary tightening policy adjustments; 56% of respondents believe that commercial and residential real estate in the United States is at risk; 44% of respondents believe the United States banking sector is at risk; Forty percent of respondents believe that the United States remains stressed and risky in terms of fiscal and debt sustainability.
Screenshot of the Fed report
Mohamed · El-Elian, Dean of Queens College at the University of Cambridge in United Kingdom, chief economic adviser to Allianz Group in Germany and a leading economist in United States, believes that United States economy is not just facing a recession.
He has repeatedly warned that the Fed will not be able to bring United States inflation down to its 2% target without hitting the economy. The deep-seated reason why the United States economy cannot get rid of the risk of recession is that the current United States economic development model is facing fundamental risks and challenges.
El-Elian: "The current economic development model in the United States is undergoing a qualitative change. Instead of pursuing the virtuous economic policies of the past, characterized by deregulation and fiscal prudence, we have become a government that arbitrarily intervenes in industrial policy and implements irresponsible fiscal policies, while at the international level we no longer talk about globalization and choose to divide and decouple. ”
Data map: Muhammad · El-Elian
Material source丨Global Information Broadcasting "Global Deep Observation"
Reporter丨Shan Shan
Source: Global Information Broadcasting