The new crown pneumonia epidemic has had an impact on the US economy. American economist Stephen Roach believes that the current market is overly dependent on the Federal Reserve (Fed) and expectsUSDIt may fall sharply again this year.
Roach said that today’s market places too much emphasis on the Fed’s maintaining interest rates at zero interest rates to prevent the economy from falling into another recession. From political turmoil to the possibility of a double-dip recession, or the possibility of a V-shaped recovery, the market does not seem to care.
Roach believes that the U.S. economy is in recession amid the surge in cases of new coronary pneumonia and the continued lockdown. He estimated that the U.S. gross domestic product (GDP) may fall in the first quarter.
He also said that after seeing an unexpected sharp drop in retail sales in November, consumer confidence was weak, and then the job market contracted again in December. He believes that an economic recession is occurring.
Roach pointed out that the current additional COVID-19 assistance measures from the US government are crucial.However, he also warned that there would be consequences. The budget deficit, which is currently at a record level, would be further expanded, which would impair domestic savings, current accounts, andUSDCaused further downward pressure, in the past nine months,USDFell sharply.
USDThe currency index has performed strongly recently, rising 0.73% in the past week, but Roach still believesUSDWill collapse. He had previously predicted thatUSDWill plunge 35% in the next 1-2 years, and since then,USDIt has fallen by 7%.
Roach believes that this yearUSDThe index will fall another 15% to 20%, which not only reflects the current account deficit, but also reflectsEURMost importantly, the Fed keeps interest rates at zero.
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