Economic performance in the United States remains subject to inflationary pressures, even if the domestic economy has not really entered a recession. America witnessed some improvement in various aspects and sectors, but this did not take it out of the critical economic period yet, even after the labor and employment indicators recorded remarkable increases, but they are not major and radical as required.
The new pressures came from the manufacturing industries, whose activity declined in the past month to levels similar to those recorded during the Corona pandemic. The latter affected the global economy in general, but it greatly affected the advanced economies, and its repercussions are still affecting the arena. And the American manufacturing industries are in themselves an important indicator of economic activity in the period of prosperity or hardships that this or that economy is going through.
These industries have gone through the longest period of decline since the Great Depression at the end of the 1920s, which confuses the general economic landscape, at a time when US legislators are trying to fill all the loopholes through which the dreaded recession could penetrate. In fact, the US economy has withstood this trend to this day, but it is not completely immune, in light of the successive rise in interest rates in order to stop the wave of inflation.
This economy is the best, at least at the present time, compared to similar Western economies, especially the British and some European economies. The manufacturing industries are the most economic activities, which usually suffer from a high interest rate, as it amounted on the American side in its latest update between 5 and 5.25 per cent. This percentage comes in the context of the strongest monetary tightening campaign at home in the United States in more than 40 years.
The problem still facing lawmakers in the United States is that they are forced to leave the door open to increasing the cost of lending in the remainder of this year, with indicators that are not stable for the fate of consumer prices in general. In other words, inflation may have jumped up, albeit in small proportions. The important point here, too, is that under monetary tightening, spending usually shifts from goods to services that consumers buy by borrowing.
On this basis, the manufacturing industries are witnessing historic declines in the American arena. The purchasing managers’ index for this sector fell to 46 points last month, for the eighth month, which is the longest period of decline in nearly 100 years. The contraction in these industries will continue in light of the global economic landscape, regardless of purchases. Also, in another track, American companies are carefully managing their inventories in anticipation of weak demand and for fear of other pressures that will exacerbate the crisis.
Also among the problems in terms of the path of the US manufacturing index is that the majority of specialists were expecting an increase in this sector, albeit by a small percentage, but the real result was the opposite of all these expectations. It should be noted that these industries represent 11.1 percent of the total US economy. However, the US administration still believes that the strength of the labor market will continue at a positive pace, and that the Federal Reserve (the central bank) is able to curb inflation in the coming period. Indeed, Treasury Secretary Janet Yellen believes that the work situation will be better even if the pace of activity declines. the domestic economy. However, matters remain open to all possibilities. If Washington managed to avoid recession before the end of this year, it might have achieved reasonable leaps in terms of employment and general economic performance. From this point everything remains related in one way or another to the upcoming revisions to the basic interest levels. Continued monetary tightening usually leaves little room for broad economic action.
2023-07-05 23:11:28
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