91download.com supports a wide range of platforms, including YouTube, Facebook, Twitter, TikTok, Instagram, Dailymotion, Reddit, Bilibili, Douyin, Xiaohongshu and Zhihu, etc. Click the download button below to parse and download the current video
The United States is experiencing a surge in business sentiment, hitting a 27-month high ahead of crucial inflation data scheduled for Friday. What does this mean for the economy, and how will it impact the Federal Reserve's decisions? Let's dive in.
Recent S&P Global PMI data revealed a nuanced scenario: while business activity rose to its highest since April 2022, the manufacturing sector unexpectedly contracted. This dichotomy raises questions about the strength and resilience of the US economy.
On one hand, the service sector is performing exceptionally well. However, the manufacturing side has been stagnant, with hopes of a rebound dashed by recent volatility. Is this a temporary blip, or a sign of deeper issues?
Despite concerns, the second quarter GDP growth forecast is optimism-inducing, with predictions ranging between 2% to 2.5%. This is higher than the consensus, but why?
The primary driver behind this growth is consumer spending. In the first quarter, consumer expenditure grew by 1.5%, and it's expected to rise to around 2% or higher in the second quarter. Given that consumer spending accounts for two-thirds of GDP, this surge is a significant boost.
Additionally, equipment spending may have increased from the first quarter, providing further impetus for overall growth. This dual increase in both business and consumer spending paints a promising picture for the quarter.
Inflation, a critical factor in economic health, is also showing signs of slowing down. The core PCE, which the Federal Reserve closely monitors, is expected to drop to around 2.5% year-over-year. While this is not yet at the target level, it is moving in the right direction.
With the Federal Reserve's next meeting on July 31st, the current data has significant implications for their policy decisions. Despite the CME FedWatch tool indicating a high chance of a September rate cut, the situation remains uncertain.
The recent underperformance in inflation data suggests a September rate cut could be a 50/50 possibility. However, more inflation data is due before September, and the unemployment rate could drift up again, influencing the Fed's decision.
For now, the prediction leans towards a fourth-quarter rate cut rather than September. The upcoming data will provide clearer guidance.
The second quarter earnings season is in full swing, offering insights into the state of the US economy. While some companies have exceeded earnings estimates, small businesses have shown resilience. This indicates an economy that may be slowing down from its unsustainable pace but is still holding on to a trend-like growth rate.
Finally, oil prices have dropped 7% this week, reaching a six-week low. This decline will benefit the consumer sector but also dampen inflationary pressures, potentially influencing the Federal Reserve's easing cycle.
In conclusion, the US economy is navigating a complex landscape with mixed signals. As we await more data, the Federal Reserve will have to make critical decisions that could shape the future of the economy. Stay tuned.
Share on Twitter Share on Facebook