Pakistani expert: US economic resilience is a drag on global development
2024-08-15
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Qais Nawab, founder of the United Nations Global Sustainable Development Strategy Institute and a Pakistani expert, wrote in an article on China Daily that the concerns about the signs of a recession in the US economy have caused a storm, and global stock markets experienced a nightmare week in early August. This pessimism not only caused turmoil in the US market, but also triggered a global sell-off, highlighting the fragility of the global economy.
US economic situation affects global stock markets
The article pointed out that recent economic indicators in the United States are deeply disturbing. Data released by the Bureau of Labor Statistics in early August showed that non-farm payrolls increased by 114,000 in July, far below the market's expectation of 175,000. In addition, the US unemployment rate rose from 4.1% to 4.3%. These data have dealt a heavy blow to the outside world's confidence in the resilience of the US economy. In the face of signs of economic weakness, the Federal Reserve still decided to keep the federal funds rate unchanged, which further exacerbated people's concerns.
The uncertainty facing the US economy has caused serious consequences. On August 2, the Nasdaq 100 index fell 3% and fell into the correction zone. At the same time, the S&P 500 and the Dow Jones Industrial Average also fell sharply. In fact, the Eurasian market was also hit. European stock markets fell sharply, with technology stocks bearing the brunt. The German DAX index and the French CAC40 index both fell significantly. Major Asia-Pacific stock markets closed down on August 2, with the Nikkei 225 index closing down 5.81% and the Japanese Topix index closing down 6.1%.
The massive market turmoil highlights the interconnectedness of the global economy. Gold prices hit new highs as fears of a U.S. recession prompted a flight to safety. The yield on the 10-year U.S. Treasury bond fell to its lowest level since December in early August as investors flocked to the relative safety of government bonds.
The lack of resilience of the US economy drags down the world
The article further analyzed that as an engine of economic growth, the technology industry has also been hit by the weak US economy. Disappointing performance recently announced by large technology companies such as Amazon and Intel has further weakened investor confidence.
Recent data show that, contrary to previous expectations, the US economy is not resilient enough. Slowing job growth and rising unemployment are signs that the US recovery has lost momentum. The US has long been seen as the engine of global growth. Now, the US economic situation shows that it can no longer play this role.
While the outside world is mainly concerned about whether the US economy will fall into recession, it is equally important to consider the broader impact of US economic policies. The US government has long been criticized for only focusing on its own interests, and its actions in recent years have exacerbated trade tensions and affected global cooperation.
In addition, the Fed's cautious attitude towards the federal funds rate reflects a deeper problem, namely the lack of a coherent economic strategy. Slow wage growth, rising inequality, and more and more people losing their jobs in the United States indicate that the US economy has not achieved a virtuous cycle, and the current market volatility may be the result of these problems accumulating over time.
