The United States announced the latest GDP According to inflation data, economic growth has slowed down, but prices continue to rise. Investors are worried that future economic growth may be lower than expected and inflation higher than expected, leading to the worst-case scenario of stagnant inflation. It is difficult to say whether the economy is good or bad, but at least the World Bank has clearly announced that commodity prices have begun to soar and inflation will exist for a longer time.
U.S. economic growth in the first quarter was much lower than expected, with an annual growth rate of 1.6%,Far below 2.5% The forecast also failed to reach the level achieved in the fourth quarter. 3.4% growth.The market recalls the United States 1970 In the early part of the decade, energy prices soared as geopolitical disagreements prompted oil-producing countries to limit crude exports to the United States. With the additional help of high government spending and the dollar’s decoupling from gold, inflation soared to Double digits, in order to finally control the situation, the then Chairman of the Federal Reserve was forced to raise interest rates to 20%quelling high prices but plunging the United States into a deep recession.
It is for this reason that analysts are currently working with 50 It shudders to compare to the period years ago.JPMorgan (JPMorgan) Jamie Dimon mentioned frequently recently 70 The stagflation period warned that the market had become too optimistic about economic conditions. He said,”1972 Things look pretty good for the year, but 1973 Things weren’t so good in 2001. Don’t fall into the false sense of security that because something looks good today, it will look good tomorrow. “
High inflation will continue until 2026
He believes that inflation is partly the result of another surge in U.S. fiscal spending, with spending projects ranging from green industrialization to global re-militarization.The U.S. government deficit now accounts for GDP of 6%,near 2 trillions of dollars, which is driving much of the inflation growth, warning that inflation could be long-lasting and last 2025 nianhe 2026 Year.BMO Capital market interest rate strategy experts said that if the Fed wants to maintain 2% To achieve its inflation target, the Fed would need to trigger a recession and interest rate policy would have to remain unchanged for many years.
Although the current situation is different from 70 There are similarities between the times, such as heightened geopolitical tensions in the Middle East and rising oil prices, but many economists believe the United States is far removed from what it was facing at the time.Even last year’s peak inflation rate was far lower than nearly that decade 12% At the high point, prices are now rising much more slowly than they were then.
But there is a growing consensus among economists and investment strategists that the days of a Goldilocks economy are numbered. A “Goldilocks economy” refers to an economy that is growing at a moderate pace, coupled with low unemployment, low inflation, and low interest rates, and is an economy that is neither too hot nor too cold.
Rising commodities fuel inflation
The World Bank’s latest warning is that falling commodity prices, a key force in deflation, have essentially hit a wall, declaring “global inflation undefeated” and likely to keep borrowing costs higher for longer.
The World Bank said prices for oil, copper and gold are all well above pre-pandemic levels.middle east conflictUpgrades could push up prices for gas, fertilizers and food The net-zero transition is pushing up prices of metals key to the rollout of green technologies Shortages of copper needed for electric vehicles and power grids have soared to a two-year high, and gold is also expected to do so this year Keep breaking records.
The World Bank’s inflation warning added to pessimism over the prospects of steep global interest rate cuts. Last month investors also predicted three U.S. interest rate cuts.However, the market currently expects 2024 There will only be two interest rate cuts before the end of the year, and there is even speculation that rates may be raised again this year.
(First image source: Unsplash)
Follow TechNews via Google News here
New scientific and technological knowledge, updated from time to time
