Focus on | economic turmoil! The policy shift path of the US, Europe and Japan is difficult to determine

As of August 15, the US has released its economic data for the second quarter. The US, Europe and Japan avoided the worst forecast of recession in the first half of the year and the economy remains resilient. The growth rate of the three major economies is clearly differentiated, with the US at above 2%. Spring Terminal block，D-sub hood and Bike Spoke Reflector should be noted.

For some time to come, the impact of high interest rates or high inflation will still bring downside risks, and the three major economies are all facing the choice of policy shift, but the path is still difficult to determine. 

America: The effect of high interest rates on economic activity

In the first half of this year, the US economy slowed down first and then rose.

The economy in the second quarter accelerated significantly compared with the first quarter, but the data in the first half of the year compared with the second half of last year still reflect a significant slowdown in economic growth.

Bloomberg reports that consumer spending and broader economic activity have cooled under pressure from higher interest rates.

Real GROSS domestic product (GDP) grew 4.9% and 3.4% in the third and fourth quarters of last year, according to the Commerce Department. It grew 1.4% in the first quarter, higher than consensus expected in the second quarter.

On the closely watched inflation data, the Fed's personal consumer expenditure price index (PCE), a preferred inflation indicator, rose 2.6% at an annualized rate in the second quarter, down from 3.4% in the first quarter.

Excluding volatile food and energy prices, the core PCE rose at a 2.9% annual rate in the second quarter, also significantly down from 3.7% in the first quarter.

The US unemployment rate rose 0.1 percentage point month-on-month to 4.1 percent in June, the highest level since November 2021, marking the third consecutive month of rise.

Bloomberg economist Eliza Wenger expects labor market cooling and slowing income growth to further fuel the slowdown in consumer spending.

《 The Wall Street Journal notes that while the economy is doing well in many ways and the pace of inflation has slowed, many Americans remain unhappy with much higher prices for food, cars and homes than they were several years ago.

Bloomberg reports that residential investment negatively impacts economic growth for the first time in a year, as high mortgage rates limit sales activity and new construction projects.

In addition, a slowdown in personal disposable income growth could mean a decline in future spending power.

The U. S. economy also faces a series of uncertainties.

According to the Fed's Beige Book, respondents expect a slowdown in the next six months due to concerns about the upcoming US election, domestic policy, geopolitical conflicts and inflation uncertainty.

Desmond Rahman, an economist at the US Enterprise Institute, believes that a range of downside risks could have potential adverse effects on the US economy.

These risks include the possible "slow disaster" in commercial real estate, which could trigger a regional banking crisis, the intensification of US government protectionism policies, and the possible spread of the Israeli-Palestinian conflict to the rest of the Middle East.

Asked if expectations of a September rate cut were reasonable, Fed Chairman Colin Powell said at a press conference after the July meeting that no decisions had been made on future meeting decisions.

But he said the recent inflation data have boosted the Fed's confidence in inflation.

" We think the time to cut interest rates is approaching.

" Traders expect the Fed to cut a 56.5 percent chance and a 53.5 percent chance of the 50 basis point cut at its September meeting.

On July 31, traders expected an 85.5% chance that the Fed would cut interest rates by 25 basis points at its September meeting.