Since the beginning of this year, there have been many predictions about the US economic recession, but the actual performance of the US economy does not seem to be the case, and some areas even have bright spots. The author believes that the contradiction between prediction and reality can be explained in two aspects:
On the one hand, the theoretical and empirically predicted recession does not happen immediately, and there are preconditions, that is, based on the US government, especially the Fed insists on the original policy and does not introduce new stimulus policies. However, the Fed’s policy cuts in July and the policy measures to stop the contraction, as well as the possibility of another 1-2 rate cuts during the year, have changed the policy environment during the forecast. The United States may be entering a period of more aggressive economic expansion.
On the other hand, when investors are holding their breath and paying close attention to when the US economy is declining, the economic situation in other countries is also very poor. There is no agreement in the UK to let the investors eager to find new investment places outside Europe, and safe-haven funds have chosen to invest in the United States. Concerns about the political trend in Argentina have intensified, and the exchange rate, stock market, and bond market of the Asian countries have plummeted and affected other emerging markets. The International Monetary Fund’s July World Economic Outlook report believes that global economic growth is not only weak, but the downside risks are intensifying, and the world economic situation is fragile, and the economic growth forecast for this year and next is lowered by 0.1 percentage points. When the “dwarf pulled the general”, the US economy has risks, but there are no other better choices. Only the two evils can be compared to the light and continue to invest in the United States.
The invester believes that the short-term embarrassment, the judgment of the rising probability of the US economic recession is still in the medium term. Because economic operations have their inherent laws. External and human intervention can accelerate or prolong the economic cycle, but it is impossible to eliminate the cyclicality of the economy. In mid-August, the US 30-year interest rate fell below 2%, and the 10-year and 2-year government bond rates were upside down. For the first time after the financial crisis, this actually sent a very important sign of recession. In the past 58 years, the earnings have been upside down eight times, and seven of them have actually experienced a recession in the next six months to two years.
At present, more than 20 central banks around the world have opened interest rate cuts, releasing liquidity to stimulate the economy, but the liquidity released thereby may flow to the United States. While pushing the US 10-year bond yields to continue to decline, it continues to push up without corresponding performance support. US stock market. According to estimates, to maintain the current valuation of the US stock market, US companies will almost maintain a profit growth of around 6.5% next year, but it is clear that this increase is unsustainable.
The main factor that will cause the US economy to enter a recession in the future may be the corporate sector, and most US companies rely heavily on global production chains. However, the US-sponsored trade war on a global scale and the decline in trade data in recent months have made market participants pessimistic about the prospects for future corporate earnings. In addition, the effect of the tax cuts introduced by the US government in the early stage is declining, and the economic performance of US companies may be weak. In the future, the profitability of American companies deserves close attention. Any turmoil may cause the stock market to bear bears, which in turn will cause the overall US economy to turn from bad to bad.