[ad_1]
Last Friday, a disappointing U.S. labor report and other indicators, the Federal Reserve’s decision to keep interest rates unchanged, and Japan’s decision to raise interest rates raised global market concerns that Japan will eventually fall into recession. North American economy. 114,000 new jobs were created, and the U.S. unemployment rate rose to 4.3%, the highest level since the epidemic.
The deterioration of the US labor market – caused by the entry of hundreds of thousands of workers into the labor market – has given rise to these “rumors” because it seems to call into question the mainstream narrative of a “soft landing” of the main economy in the world. That is, the ability of the Federal Reserve to reduce the level of inflation in North America to the desired range without causing this economy to fall into recession, that is, two consecutive quarters of negative growth.
The fact is that the United States’ post-epidemic growth momentum is much better than that of other developed countries and regional economies. In addition, in recent years, it has repeatedly ignored negative outlooks and the so-called “recession winds.” In the second quarter of this year, the annualized growth rate of the US economy was 2.8%, similar to the level of the past six quarters.
Many analysts say there are no signs of an imminent collapse in U.S. economic activity, even as the performance of the labor market has replaced inflation as the focus of attention.
The North American economy plays such a large role as a global growth engine that these concerns are replicated at different latitudes and reflected in the stock market. Although a US “recession” seems unlikely to materialize and international markets have returned to calm this week, there are signs and indicators that the US economic growth rate is slowing down. In other words, the “plunge” is indeed worthy of vigilance.
For example, analysts emphasize that the loss of dynamism in the labor market is exacerbated by signs of deteriorating consumer confidence. The manufacturing sector and its ability to create jobs are currently in poor condition compared to the service sector and public administration. In addition, although inflation has been falling, prices today are higher than before the pandemic, which is not good for citizens’ perceptions and expectations.
All of this global discussion about the health of the U.S. economy is taking place during a presidential campaign, which is unprecedented in history. The fight between Vice President Kamala Harris and former President Donald Trump — before the resignation of current President Joe Biden — brought a certain amount of uncertainty. Especially when polls show that American voters think Trump is handling the economy better than the current Biden administration.
In conclusion, a slowdown in the US economy will not only have electoral consequences for the Harris-Trump campaign, but will also pull down global economic activity, including in Colombia. The world will be watching closely the upcoming data on North American economic performance and the Federal Reserve’s interest rate decision next September.
Francisco Miranda Hamburg
framir@portafolio.co
X: @pachomiranda
[ad_2]
Source link
