Joint Journal of American Economists: The US economy may soon fall into recession Consumers | US | Economy
On September 14th, Eric Lund and Dana Peterson, chief economists of the World Federation of Large Enterprises, a US economic research firm, jointly published an article on CNN titled "The US Economy May Quickly Fall into a Recession", stating that new information suggests that American consumers may eventually fall into trouble, which could lead to a rapid recession in the US economy.
The article states that in July, the actual personal disposable income and personal savings in the United States both decreased significantly, while consumer spending increased significantly. This indicates that consumers may be getting rid of their consumption habits. If expenditure growth exceeds income growth, Americans will either become indebted or withdraw savings, both of which are unsustainable. Data shows that in the second quarter, the outstanding credit card debt in the United States increased to over $1 trillion, and car loans increased to nearly $1.6 trillion, both reaching new highs. Meanwhile, approximately $2.1 trillion in savings are rapidly being spent, estimated to have dropped to only $190 billion. If there is further imbalance between expenditure and income, these savings may be spent before the end of the year.
The article warns that this information does not bode well for future expenditures. The United States will resume repayment of student loans in October, and after a three-year hiatus, millions of people will have to transfer back a portion of their monthly wages. This may lead to a monthly reduction of approximately $9 billion in consumer spending, thereby increasing the likelihood of an economic recession. In addition, consumer confidence in the United States decreased in August, and public evaluations of the current situation and future expectations were at a low point. The index tracking expectations fell slightly above 80, indicating that a recession may be imminent.
The article predicts that as the end of the year approaches, the public will see more fragile US economic data. At that time, income growth will continue to cool, savings will decrease, debt will rise, and ultimately American consumers will have to cut back on spending, with the most likely outcome being a recession in the US economy.
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