The United States has recently released a series of economic data. The data on the US service industry, manufacturing and consumer confidence have become increasingly ugly. The financial sector has experienced a series of dangers and flashovers. The shortage of liquidity has continued for nearly 90 days. Various signs indicate that the economic expansion of the US economy for 11 years is unsustainable, and signs of economic contraction are beginning to appear.
A series of recently released data shows that the US service industry, manufacturing and consumer confidence data are becoming increasingly ugly, financial markets have been collapsing, and liquidity shortages have continued for nearly 90 days. This shows that the continued expansion of the US economy for 11 years is unsustainable. The current American economy complies with the sentence in "A Dream of Red Mansions": "Although the outer shelf is not very down, the inner bag is up."
Data released by the American Institute of Supply Management recently showed that the growth rate of the US non-manufacturing index (tracking medical, financial, agricultural, and construction) in November was lower than October, and fell from 54.7 in October to 53.9. Statistics show that business investment is still a weak link in the economy. Non-residential fixed investment (reflecting business expenses in software, R & D, equipment, and structure) fell by 2.7% in the third quarter after a 1% decline in the previous quarter.
According to the government's first extensive estimate, U.S. corporate profits began to decline in the third quarter, and a key indicator of business earnings (excluding after-tax profits, which excludes inventory valuation and capital consumption adjustments) fell by 0.6% from the previous quarter. Compared with the third quarter of last year, profit after tax fell by 0.4%.
Data released by the Institute of Supply Management recently showed that the PMI of the US manufacturing industry dropped 0.2 to 48.1 in November, shrinking for 4 consecutive months. The new orders index fell 1.9 to 47.2, the inventory index fell 3.4 to 45.5, the employment index fell 1.1 to 46.6, and the new export order index fell 2.5 to 47.9. Manufacturing accounts for about 11% of the US economy. The continued shrinking manufacturing industry has aggravated concerns that the economic growth of the United States in the fourth quarter of this year may slow down sharply.
Although the unemployment rate in the United States fell in November compared with the previous month, and new jobs in the non-agricultural sector were higher than market expectations, it still failed to support the US consumer confidence index. In November, the U.S. consumer confidence index fell for the fourth month in a row. This is another sign that U.S. households are cutting back on spending in the face of a slowing global economy and continuing concerns about trade policies. The Federation of Large Businesses said its consumer confidence index fell to 125.5 in November from 126.1 in October. The consumer index of current business and labor market conditions fell from 173.5 in October to 166.9 in November.
In addition, affected by US trade policy, most US retailers are trying to [digest" tariff costs, and small and medium-sized retailers are in a particularly difficult situation. Although US consumers have not yet clearly felt the impact of price increases, the survey shows that 80% of consumers are worried about tariffs pushing up prices.
Consumption plays an irreplaceable pull on the US economy. However, over-reliance on consumer-driven growth is problematic. The potential strength of the US economy is declining, and consumption data has traditionally been a lagging indicator of economic weakness. The business cycle is driven by housing and business investment, and it is too late by the time consumer spending begins to weaken. When an economy's growth is too dependent on consumer spending, it is often a warning sign.
At present, the US's dominant position in the global service economy has declined. From 2003 to 2015, the U.S. trade surplus in services such as medical services, higher education, royalties, and payment processing increased nearly five-fold to $ 263.3 billion. However, growth has stalled since then. In the first nine months of 2019, exports of services barely increased, and imports increased by 5.5%.
By the end of September, the U.S. service trade surplus was US $ 178.5 billion, a decrease of 10% from the same period of the previous year, and the largest annual decline since 2003 is likely. The U.S. service industry has created millions of jobs in the academic, technology, financial, and consulting fields, often in high-skilled jobs. The decline in the dominance of the service industry means a decline in US core competitiveness.
In the financial field, the United States is in danger. Recently, the U.S. financial market has continued to collapse, and the New York Federal Reserve has continued to invest liquidity in the market. In the day of December 4, it injected $ 70.1 billion of temporary liquidity into the financial market. Banks sold $ 54.9 billion in U.S. Treasuries and $ 15.2 billion in mortgage securities to the Federal Reserve, and the Federal Reserve took all of those bonds.
The Fed's intervention aims to ensure that the financial system is sufficiently liquid and that short-term lending rates are stable. Since mid-September, short-term interest rates have soared unexpectedly due to a variety of factors, and the Federal Reserve has been intervening in the market in the current way. However, the liquidity provided by the Federal Reserve to the US financial market is like entering a black hole, silent and unresponsive. So what the Fed can do is keep printing money and buying debt. Some financial institutions predict that the yield on 10-year US Treasury bonds will fall to around 1.2 by the middle of next year, and the yen-dollar exchange rate may be rocketing into the sky.
Signs of U.S. economic contraction appear
2020 03/24