Us economic data is suspected of being falsified

Since the beginning of this year, the US economy has not only failed to show a recession as expected by the market, but has maintained rapid growth. However, this deviates from the deterioration of some data indicators, and some views believe that the US data is suspected of "falsification". In order to understand reality objectively and accurately, we must first avoid preconceived conclusions.

In fact, the current US economy shows the characteristics of a "rolling" recession, that is, under the pressure of the Federal Reserve to continue to raise interest rates, different industries are not simultaneously falling into recession, but alternately weakening, while the overall economy is maintained at a relatively healthy level. This explains the contrast between weaker US data and stronger growth. So far, at least, the US economy has indeed shown considerable resilience compared to last year's widespread expectations of an imminent "hard landing".

Combing through the various discussions, we can see that this question is mainly related to the weakness of the following three indicators: the decline in imports, the rise in the number of bankruptcies of large enterprises, and the decline in government tax revenues. The decline in imports was affected by the improvement of the supply side and the change in the consumption structure. In the first half of 2023, the year-on-year growth rate of imports in the United States dropped to -4.3%, while the year-on-year growth rate of GDP remained at a relatively high level of 2.1%, and the trend of import growth and economic growth was significantly different. This can be observed from the supply side, but also can be understood from the demand side of the change in the structure of American household consumption; The rise in the number of bankruptcies of large enterprises is a partial phenomenon, and the number of full-caliber bankruptcy cases is still low. According to corporate bankruptcy data compiled by Standard & Poor's Global, a total of 340 large and medium-sized companies in the United States have filed for bankruptcy protection, a record high since 2010. The bankruptcy of large and medium-sized enterprises does reflect that the high interest rate has exerted great pressure on the operation of some enterprises, but we still need to observe the US economy accurately and comprehensively. In the first half of 2023, the federal government's tax revenue fell by 11.8% year-on-year, of which personal tax revenue fell by 13.4% year-on-year, and corporate tax revenue fell by 1.9% year-on-year.

After clarifying the contradictions between some economic indicators and economic growth in the United States, at least the following conclusions or Revelations can be drawn: First, due to the transition of the domestic economy in the epidemic period to the social economy in the post-epidemic period, the current round of the US economy has shown a new feature of "rolling" recession, and the manufacturing industry is facing greater downward pressure, so imports are weak, electricity consumption is declining, etc., but under the support of the service industry, the overall economy is still relatively strong, which makes the service industry perform strongly, employment is strong, and economic growth is fast. Second, the easing policy in the United States is still being continued in different forms under the circumstance that the risk of economic recession has diminished. Policies such as inflation-adjusted taxes, which help improve income distribution and reduce the pressure on low-income earners, explain the reasons behind the decline in tax revenue.

Overall, the fall in inflation shows that the overheating of the US economy is subsiding, the contradiction between supply and demand is easing, and the economic operation is returning to normal. However, it remains to be seen whether this rebalancing process will be smooth. Will the recent strike by the workers of the three major U.S. auto companies spread further, and will the recent geopolitical conflict in the Middle East lead to a sustained rise in oil prices? Will China's economic recovery speed up? Will these factors lead to a longer period of high inflation in the US and a longer process of interest rate cuts? Will rolling over and issuing maturing private sector debt face a rapid rise in funding costs? With Treasury market holders more sensitive to bond prices, the share of AAA-rated corporate debt continuing to decline, and the share of junk debt companies high, will volatility in US financial markets increase? These factors may become important factors affecting the future direction of monetary policy and economic trend of the United States.