Trump said that this slogan is his own, and no one knows this slogan better than him.
More importantly, Trump also announced that the US economy will usher in an "incredible" recovery year next year. Many experts and politicians also believe that once the social blockade is lifted, the economy will return to normal.
However, Federal Reserve Chairman Paul poured cold water on the idea of a strong recovery. He warned that the United States may face a serious and long-term economic recession. The scale and speed of this recession is unprecedented in modern history, and it is more serious than any recession since World War II.
The only question this year is how big the negative growth is.
Powell's remarks are not alarmist.
In fact, the American economy has fallen into recession. In the first quarter, the real GDP of the United States decreased by 4.8% from the previous quarter. You know, the epidemic didn't spread in the United States until the second half of March, and there was no obvious blockade and closure in the whole country except new york.
Employment data show that non-farm employment decreased by 20.5 million in April, and the unemployment rate rose to 14.7%, indicating that the blockade measures are exerting historic pressure on the US labor market.
Now, the epidemic trend and the corresponding economic trend in the United States and the world are still unclear, and the negative growth of GDP in the United States is almost certain. According to the prediction of the World Federation of Large Enterprises, the GDP growth rate of the United States will be between -3.6% and -7.4% in 2020.
Specifically, the U.S. Conference Board divides the epidemic into different scenarios, and predicts the economic prospects of the United States in 2020 according to the prevention and control measures of the U.S. government:
(1) Fast recovery. The epidemic reached an inflection point in April and resumed work in May. The annual GDP is expected to be -3.6% (this scenario has failed because there was no obvious turning point at that time).
(2) Summer recovery. The epidemic reached its peak in May, which led to an emergency economic contraction in the second quarter, but it recovered strongly in the third quarter, with an annual GDP of-6.6%.
(3) Autumn recovery. Due to the continuous spread of the epidemic, the policy of returning to work was not fully implemented, and the economic weakness continued until the third quarter. The economy achieved a U-shaped recovery and the annual GDP was-6.5%.
(4) The epidemic reappeared in the third quarter (W-shaped recovery). The prevention and control of the autumn epidemic failed, spread again, and the blockade policy was restarted. Although the economy recovered in the third quarter, it will decline again in the fourth quarter, with an annual GDP of-7.4%.
According to this forecast, the United States will almost certainly fall into recession in 2020. The International Monetary Fund and other institutions are full of optimism about the US economy next year. The IMF predicts that the American economy will grow by 4.7% in 20021year. In this regard, we think it is too optimistic. Below, from a short-term and long-term perspective, explain it.
There are favorable factors for recovery, but only in the short term.
In the short term, there are four favorable factors for the US economic recovery.
1. Most of the current unemployment is temporary unemployment, and the employment data will pick up during the recovery process.
As for the 20.5 million non-agricultural jobs lost in April, it is a little gratifying that about180,000 of these unemployed people are temporary unemployment, which is different from the general recession unemployment, which is mostly permanent unemployment. If the epidemic is controlled in the later period and the economy is restarted, these temporarily unemployed people will return to their jobs at a faster speed.
In March, based on the 20 19 Household Economic and Decision-making Survey (SHED), the Federal Reserve conducted a small-scale supplementary survey, focusing on the impact of the labor market and the overall financial situation of households. According to the report, 65,438+03% of the respondents (accounting for 20% of those employed in February) did not have a job in March or early April this year, but many people who lost their jobs during this period still kept in touch with their employers, and 77% said that their employers would re-hire them later, but did not tell them the specific time to return to work.
There is a great impulse to return to work all over the country.
Due to the soaring unemployment rate, the increasing public opinion on restarting the economy and the concern that American companies lose their global market share, the Trump administration has a greater impulse to return to work. At present, most States in the United States have lifted restrictions to varying degrees, the guidelines of the US government for returning to work are more radical, and the resistance of the American people to home isolation is also stronger, which will accelerate the recovery of the rate of returning to work. Many Americans believe that instead of hesitating between relaxing the policy of social isolation and restarting the economy, it is better to restart the economy in an all-round way and at least let more people return to work.
3. Short-term policy hedging is effective.
During the financial crisis in 2008, Wall Street lacked liquidity and questioned the necessity of financial rescue, which led to a panic decline in the market due to the break of funds, forming a spiral negative feedback. The crisis spread from troubled financial institutions to high-quality enterprises, and it didn't begin to improve until the Federal Reserve stepped in, took over Fannie Mae and Freddie Mac, and rescued systemically important financial institutions. Shortly after the beginning of this technical bear market, the Federal Reserve quickly launched reverse repurchase, injected liquidity into the market, controlled the maturity spread and volatility of national debt, and limited the continuous expansion of credit spread, which was very timely.
At that time, the Federal Reserve's stimulus policy lasted for several months, and it was regrettable to hesitate to wait until Lehman Brothers went bankrupt and the crisis had taken shape before rescuing the market on a large scale. This time, we will not wait for the crisis to take shape and intervene in the capital market and physical credit in time. I believe we won't repeat the mistake of 12 years ago.
In addition, we believe that the Fed still has some room from the policy bottom line in 2008. As a last resort, the Federal Reserve began to buy high-yield bonds (junk bonds) in the market, which narrowed the credit spread and achieved good results. In fact, the Federal Reserve recently indicated that the main street loan project has been supported by the Ministry of Finance's $75 billion venture capital and will provide $600 billion in loans.
4. Medium-core countries in Europe and America will repair * * * through vibration.
China has fully resumed work, and Europe is gradually restarting its economy. The core country * * * may be able to repair it faster than China. This will help to achieve a sufficient scale of demand expansion in a short period of time, and these global demands will help American companies regain orders.
Disadvantages may persist for a long time.
In the long run, the US economic recovery faces the following three unfavorable factors.
1, the biggest risk is the second outbreak of the epidemic in the United States.
Now, the turning point of the American epidemic is slowly emerging, and the plan to return to work is expected to be more radical. A more radical plan to return to work means a greater risk of a second outbreak. As predicted by the American Conference Committee mentioned above, if the American blockade measures fail, the epidemic in the United States may recur in autumn. Then, the American economy will obviously decline again in the fourth quarter, which is likely to affect the economic recovery next year.
Is it really possible that the epidemic prevention measures in the United States will fail? Yes, it's not alarmist. One of the most important reasons is the low governance and coordination ability of the American government from the federal level to the state and county level. The following example can illustrate the inefficiency of epidemic prevention and control at all levels of government in the United States:
On March 3 1 day, when the epidemic in the United States was the most urgent, Cuomo, the governor of New York, who was at the center of the epidemic, said at the epidemic conference:
Cuomo is too difficult. But obviously, it is difficult to change the governance system that is difficult to coordinate and unify between the federal government and the state government in the short term.
2. American residents' precautionary savings may increase, which restricts the recovery of consumption.
This restriction will increase the difficulty of policy hedging and weaken the effect of stimulus policies. Major natural disasters, economic or financial crises will have a far-reaching impact on residents' impulse to save. Taking the recent "Great Recession" in 2008 as an example, the proportion of personal savings in disposable income in the United States rose from 3.8% at the low point to 65,438+02% at the end of 2065,438+02, which lasted for more than four years. Now we can see that this proportion has started to increase obviously, reaching 13. 1% at the end of March.
Obviously, behind savings is the reduction of immediate consumption. Therefore, it seems difficult to expect a fundamental recovery in American consumption next year or longer. You know, American consumption accounts for 70% of GDP.
At the same time, although American states have started to resume work one after another, it is easy to suspend the economy but difficult to start it. The increase of unemployment, the decrease of income and the bankruptcy of enterprises will all have multiplier effects, which are not only short-term. Therefore, the unemployment rate in the United States often has the characteristics of rapid rise and slow decline. In the 1 1 cycle since 1948 in the United States, the unemployment rate reached its peak rapidly within 1 1 month on average, and it only returned to its low point in an average of 58 months, with the longest time being 199655.
3. Long-term policies are limited.
This constraint is that it is difficult for the United States to implement negative interest rates. Recently, Trump and Federal Reserve Chairman Bauer once again "squeezed". Trump called himself a staunch supporter of negative interest rates, but Powell flatly refused, saying that it is impossible for the United States to implement negative interest rates. The reason behind this is that, as the anchor of the world reserve currency and the global financial market, the interest rate of the United States is also the anchor pricing of the global financial market.
More importantly, the United States has a $4 trillion monetary fund, which is an important channel for short-term financing and capital operation of enterprises. A large number of enterprises raise funds through short-term commercial paper. Negative interest rate will lead to the loss of money fund investors and cause short-term financing problems for American enterprises.
In short, the negative interest rate in the United States has a very limited stimulating effect on the economy, but it has a very negative impact on the global monetary and financial markets.
To sum up, the long-standing unfavorable factors will make it difficult for the US economy to recover strongly next year.
When all people suffer the same extreme disaster, more people will be willing to accept some sacrifices. Explained in vernacular Chinese, human beings are more United in the face of the disaster of "the sky is falling". So we can see that although some politicians in Europe and America dumped China, in fact, the whole world took more concerted actions to deal with this disaster.
In addition, human beings have the ability to change nature (or think they have this ability), which makes this unity look more effective. The policy hedging made by government decision makers and vested interests, including the Federal Reserve, in the past two months is the embodiment of this ability. From this point of view, this policy will effectively alleviate the extreme predicament of the United States in the short term and will not collapse.
However, once this disaster is over, different interest groups will definitely start their own calculations again. By next year or beyond, it will be difficult for European and American countries to continue such national and global consistent policy actions. And the previous concerted action will cause other sequelae in the longer future, of course, this is another story.
Read the original text: the strong recovery of the American economy will not come.