US Economy - News, Updates and Discussion

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[F-22Raptor]

Real gross domestic product (GDP) increased at an annual rate of 3.3 percent in the fourth quarter of 2023 (table 1), according to the "advance" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 4.9 percent.

Real GDP increased 2.5 percent in 2023 (from the 2022 annual level to the 2023 annual level), compared with an increase of 1.9 percent in 2022 (table 1).

Current-dollar GDP increased 6.3 percent, or $1.61 trillion, in 2023 to a level of $27.36 trillion

 

[F-22Raptor]

Inflation murdered

 

[Pakman1]

Inflation murdered

@F-22Raptor , the US economy has always been great, but lots of mismanagement by the financial gurus and uncontrolled spending leading to record deficits. Government needs to be streamlined to do a better job managing the economy.

 

[F-22Raptor]

The US has pulled further ahead of China in the race for world’s biggest economy, thanks in part to a vibrant American consumer.
US gross domestic product rose 6.3% in nominal terms — that is, unadjusted for inflation — last year, outpacing China’s 4.6% gain. While some of the outperformance reflected America’s elevated price increases, the 2023 outturn underscores a broader point: The US economy is emerging from the pandemic period in a better place than China’s.

“It is a striking turn of fortunes,” said Eswar Prasad, who once led the International Monetary Fund’s China team and is now at Cornell University. “The strong performance of the US economy, in tandem with all the short-term and long-term headwinds the Chinese economy is facing, renders it a less obvious proposition that China’s GDP will someday overtake that of the US.”

The economic outperformance is reflected in the respective countries’ stock markets. US shares have hit all-time highs this week, while Chinese equities are mired in a $6 trillion-plus bear-market rout.

It wasn’t expected to be this way. At the start of last year, the US was widely tipped to fall into a recession as the Federal Reserve jacked up interest rates to combat an inflation scourge not seen in decades.

China, on the other hand, was expected to experience a rip-roaring recovery as it reopened its economy fully to commerce after strict lockdowns to combat the spread of Covid-19.

That’s not what happened. GDP data released on Thursday showed the US economy ended the year with a bang, growing 3.3% in real, inflation-adjusted terms in the fourth quarter after expanding 4.9% in the third. Inflation is on its way back down to the Fed’s 2% target and fears of a recession are fading.

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Property Bust​

China, by contrast, is struggling under the weight of a years-long real estate bust and its worst streak of deflation in some 25 years. Exports — once a critical pillar of growth — declined in 2023, joblessness among young people has soared and local governments are saddled with too much debt.

While government figures show the economy met the authorities’ annual growth target, by expanding 5.2% in 2023, there are suspicions that isn’t a true picture of what’s going on.

To be sure, nominal GDP isn’t the only way to measure the size of a country’s economy.
Economists also use something called purchasing power parity, which tries to take account of differences in prices between countries for the same good or service. On that basis, as calculated by Bloomberg Economics, China overtook the US around 2016: A dollar in China simply buys a lot more that it does in the US.

But many observers don’t think that’s the best way to measure economic heft on the world stage. For that, nominal GDP is seen as a better guide.

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Power Issue​

“The pandemic covered up a lot of China’s weaknesses that are deep and structural and will last through the decade — depending on their ability to reform,” said Josh Lipsky, a former IMF adviser who is now director of the Atlantic Council’s GeoEconomics Center.

Peterson Institute for International Economics President Adam Posen argues that Chinese President Xi Jinping has greatly compounded the country’s underlying economic weaknesses by his arbitrary and authoritarian exercise of power throughout the economy and society, particularly during the pandemic.

That’s spooked households and small businesses into hoarding cash, because they just don’t know what’s coming next. It’s a malady that Posen has called “economic long Covid” — a chronic condition marked by a lack of vitality and extended sluggishness.
The US, meanwhile, has surprised economists with the resiliency of its economy coming out the pandemic. Some like Posen even suspect the country may be on the cusp of a pickup in productivity growth that will allow the economy to grow faster without generating inflation.

However, the final act in the Fed’s campaign to return US inflation to its 2% target has yet to be written. There’s still a risk it could keep policy too tight for too long, and precipitate a downturn.

The jobs market is showing signs of weakening at the edges. As a result, MacroPolicy Perspectives LLC founder and former Fed economist Julia Coronado told an American Enterprise Institute webinar on Wednesday the risks of a recession are higher now than at the start of 2023, though her base case remains that one will be avoided.

The US has longer-term concerns as well, including a historically high budget deficit.
Still, the story from last year is clear.

“All the talk of China becoming the world’s largest economy by GDP has been put on the backburner and delayed, if not indefinitely postponed,” Lipsky said.

 

[Muji.Iqbal]

Personally I hope China wins the race to become the world's largest economy in Nominal GDP. I think the world wants that.

 

[Muji.Iqbal]

@Beijingwalker

Your views?

 

[Beijingwalker]

@Beijingwalker

Your views?

US GDP is only good on paper, it's a big bubble without substance, it's manufacturing is shrinking, the empty figure is just bloated by currency manipulation and inflation, in real life, people's life is actually getting worse.
US now actually has no money for everything, no money for upgrading its dilapidated infrastructure, no money for upgrading its legacy cold war weapons, no money for overseas wars.
US can not forever use dollar domination to their benefits, other currencies have already started to challenge it, once dollar domination is finished or just weakened, US will become a poor country overnight.

 

[Yommie]

US GDP is only good on paper, it's a big bubble without substance, it's manufacturing is shrinking, the empty figure is just bloated by currency manipulation and inflation, in real life, people's life is actually getting worse.
US now actually has no money for everything, no money for upgrading its dilapidated infrastructure, no money for upgrading its legacy cold war weapons, no money for overseas wars.
US can not forever use dollar domination to their benefits, other currencies have already started to challenge it, once dollar domination is finished or just weakened, US will become a poor country overnight.

In China it is called paper tiger.

 

[Beijingwalker]

In China it is called paper tiger.

Before every country feared US sanctions on them, now they regard US sanctions as a joke.

 

[dbc]

US GDP is only good on paper, it's a big bubble without substance, it's manufacturing is shrinking,

US Manufacturing output was 1.4 trillion USD in 1997. 2.5 trillion USD in 2021 both numbers are in current US Dollars. So how exactly is manufacturing shrinking?

 

[Beijingwalker]

US Manufacturing output was 1.4 trillion USD in 1997. 2.5 trillion USD in 2021 both numbers are in current US Dollars. So have exactly is manufacturing shrinking?

Relative to the manufacturing global share, if you compare with the distance past, almost all countries grow.

 

[Yommie]

US Manufacturing output was 1.4 trillion USD in 1997. 2.5 trillion USD in 2021 both numbers are in current US Dollars. So have exactly is manufacturing shrinking?

Taking inflation into account, manufacturing may have dropped per capita. I remember when I was little in the 1990s there used to be GE TVs. Now there's no more GE TVs.

 

[Beijingwalker]

China's industrial prowess and manufacturing sector is still expanding, it's true that the consumption hasn't caught up.
US growth is just based on inflation driven consumption which has no substance.

 

[dbc]

Relative to the manufacturing global share, if you compare with the distance past, almost all countries grow.

Global share? China’s manufacturing output in 2021 was 4.5 trillion USD vs 2.5 Trillion for the US. China's Global Share in 2021 was 28% vs 16%, for the US. The US share has increased YoY - while China’s growth has declined since 2020. So you are wrong about US Manufacturing declining.