Matters:
In the first quarter of 2022, the real GDP (initial value) of the United States decreased by 1.4% month on month and is expected to increase by 1.1%. After the data were released: US stocks opened higher, and the S & P 500 index opened up 1.35%; The ten-year US bond interest rate jumped by about 6-7bp, and approached 2.9% in intraday trading; The dollar index rose further and approached 104 in the session. The overall response of the market was relatively positive, and there was no transaction on the "recession" of the US economy or the slowdown and increase of interest rates by the Federal Reserve.
Ping An View:
In terms of total volume, the US GDP showed negative growth in the first quarter, mainly reflecting the base effect brought by the strong US economic growth in the fourth quarter of last year. In the fourth quarter of 2021, the real GDP of the United States was 6.9% month on month, the highest in the whole year. GDP grew by 9% in the fourth quarter of last year, compared with the average growth rate in the first quarter of last year, which is basically 1.9% in real terms.
By item, the negative growth of US GDP in the first quarter was mainly dragged down by three aspects. First, private investment (especially the change of private inventory) fell sharply month on month due to the base. In the first quarter, the pull of private investment on US GDP fell sharply to 0.43% from 5.82% in the fourth quarter of 2021, the largest drop among all sub items. In terms of investment breakdown, the month on month pull rate of private inventory investment on GDP in the fourth quarter of 2021 was as high as 5.32%, but the pull rate in the first quarter of this year fell to - 0.84%. Second, weak exports combined with a surge in imports led to a sharp decline in net exports month on month. With the US trade deficit reaching a new high, the drag of US net exports on its GDP in the first quarter of this year was 3.2%. Specifically, while exports fell (dragged down 0.68%), imports maintained rapid growth (dragged down 2.53%). We believe that the surge in imports may be due to the improvement of port congestion. After the opening of the port, some ships that arrived in 2021 but have not yet delivered have formed the actual import volume in the first quarter of this year, which is also illustrated by the anti seasonal rebound in the import container throughput of major ports in the United States. Third, government expenditure continued to decline significantly. In the first quarter of 2022, the pull of US government expenditure on GDP fell further to - 0.48%, the lowest since 2014. According to BEA's official explanation, due to the expiration or reduction of some economic rescue plans, the US government's exempted loans to enterprises, grants to state and local governments, and social welfare for families have all been reduced.
On the whole, the US GDP fell more than expected in the first quarter, which is a "temporary recession" or will not change the tightening rhythm of the Federal Reserve for the time being. First, the decline of private inventories and the easing of supply chain congestion in the United States are all short-term factors; The long-term growth momentum of private consumption and fixed investment in the United States is still recovering. Second, "high inflation and strong employment" means that the Fed needs to tighten as scheduled. Similar to the "temporary inflation" in 2021, the Federal Reserve can also define that there is a "temporary recession" in the current U.S. economy, so it will not easily overturn the newly established tightening expectations. It is likely that the interest rate increase of 50bp will be announced as scheduled at the interest rate meeting in May. On the other hand, we also stressed that in the second half of this year, US inflation may cool down and the downward pressure on the US economy may become more prominent. The Fed's policy needs to maintain certain flexibility, slow down the pace of tightening when necessary, and try to avoid the risk of "hard landing" of the economy. Considering that the U.S. economy is not stronger than expected, and the interest rate hike and table contraction are somewhat alternative, the Fed may not be too radical in the table contraction resolution.
