Core conclusion
In this paper, we will discuss three questions: what is the driving force (growth trend) of U.S. economic growth after the epidemic? What is the momentum (economic growth intensity)? The logic and extent of the kinetic energy and momentum of the slowdown of the US economy in the second half of this year and the recession next year.
What do you think of the resilience of the US economy after the epidemic? Four points of kinetic energy. 1) Financial transfer payments and service consumption were blocked, and accumulated savings increased significantly to support "willful" consumption; 2) The de stocking of real estate after the epidemic has promoted the current replenishment of real estate inventory; 3) Capital construction dividends just released; 4) High profit margins drive corporate capital expenditure.
The momentum of recovery after the epidemic (economic growth intensity) from the elasticity of US economic indicators. After the epidemic, many economic indicators in the United States are quite flexible, but they are divided into three types: 1) caused by a low base, often from the impulse recovery after supply inhibition. After the rapid repair in the initial stage, the elasticity of such indicators will weaken significantly. The most typical example is the capacity utilization rate of the industrial sector; 2) High elasticity contributed by price factors: nominal index rising rapidly with inflation after 2021q3. As long as inflation cools, such indicators will probably turn around and slow down; 3) High elasticity driven by high availability: higher demand elasticity and less supply elasticity constraints, such as personal durable goods consumption, post epidemic real estate sales and employment data. However, the investment elasticity of the enterprise sector after the epidemic is weak, or it is related to the uncertainty of the epidemic and the upward slope of inflation and labor costs in the United States after the epidemic is significantly higher than that in previous recovery stages. In fact, the upward pulse of various economic indicators after the epidemic is an important momentum for the recovery of the U.S. economy in the past few quarters. Looking back, personal service consumption is still somewhat upward flexible, but the space is limited, so the U.S. economy has little action power.
US economy: momentum has declined; Kinetic energy is about to weaken. 1) Momentum in the US economy has waned: growth is slowing. The restoration of each type of economic behavior needs to resonate with the recovery of employment. Although the elasticity and rhythm of different sectors are different, we can use employment data to measure the recovery "elasticity" of the overall U.S. economy, that is, economic momentum. At present, the elasticity of most economic activities in the three sectors is no longer, but personal service consumption still benefits from the accumulated savings and unsealing process after the epidemic. This means that in the future, the employment absorption capacity of various industries in the United States is weakening, and then the momentum of economic growth in the United States is bound to weaken.
2) it is estimated that Q1 and Q3 in 2023 will turn negative on a quarter on quarter basis, and the real GDP will slow down almost quarter by quarter until 2023q4 drops to 0.2%. 3) Structural estimation: in 2023, personal consumption and enterprise capital expenditure will fall to 0, and real estate investment will turn negative.
Risk tip: the fundamentals of the US economy exceeded expectations; Development expectation of epidemic situation in the United States; The monetary policy of the Federal Reserve exceeded expectations; Biden's fiscal and tax policies exceeded expectations.
