In the past two years, the GDP of the United States has been growing rapidly despite continuous water injection.
However, through the following analysis, we can almost confirm that the gap between the two sides will be significantly reduced in 2024.
The reasons are multifaceted, including both the self inflicted actions of the United States and the rapid recovery of our economy.
01
In the first half of 2023, the GDP of the United States increased significantly again compared to the end of last year.
But now we have entered the fourth quarter, and since the United States has not yet released its third quarter data, we can temporarily put it aside and focus on the 2022 US GDP data.
In 2021, the GDP of the United States was only around 23000 billion, but in 2022, it skyrocketed to well over 250000 billion. Is it surprising that the world's largest GDP has grown by nearly 10%?
Don't be surprised in a hurry, let's take a look at which of this growth is moisture?
In fact, the GDP growth rate announced by the US statistics department already indicates the fact. At the beginning of this year, when the 2022 GDP growth rate was initially announced, it reached 2.2% year-on-year. Subsequently, the United States made a downward correction to this value, and the final growth rate was confirmed to be 2.1%.
Compared with the nominal growth rate we calculated above reaching 9.3%, the actual growth rate has significantly decreased.
The difference between the two, as high as 7.2 percentage points, is contributed by inflation and rising prices.
After analyzing the GDP figures for 2022, we believe that when 2024 arrives, we will definitely find that the GDP of the United States will also experience significant growth in 2023, but it is also caused by inflation this year.
02
Don't be misled by the fact that the current inflation rate in the United States is much lower than last year.
Last year, the highest reached 9.1%, and this year the lowest has dropped to 3%. Recently, it has rebounded slightly, returning to 3.7%. However, overall, the inflation rate in 2023 is nearly half lower than in 2022.
Is inflation in the United States really being controlled? That's not the case.
The CPI we usually look at is a year-on-year data. This year, the CPI in the United States has dropped completely because prices were already in a very high position last year, purely because the base was high, so the year-on-year data has decreased.
In fact, when we look at the monthly month on month CPI data in the United States, we can see that each month is still growing compared to the previous month.
By the way, Japan's current CPI has also exceeded 3%. Why is the Bank of Japan still loose and hesitant to raise interest rates?
The truth is actually the same. Although the CPI has temporarily exceeded the target by 2%, due to the past low prices in Japan, although the growth rate has been slightly higher now, it is only due to a lower base.
Japan cannot believe it for the time being. It has truly stepped out of deflation and naturally dare not easily raise interest rates.
The situation at the Federal Reserve is actually the same now. Although inflation has slightly decreased, the Federal Reserve is not certain that the current declining CPI data means inflation has decreased, and therefore the Federal Reserve is not willing to lower interest rates because high inflation has been ongoing for more than two years.
However, we can infer from this that the year-on-year CPI data of the United States in 2024 may further decline, and the contribution rate of prices to GDP will also significantly decline.
So by that time, the relative decrease in GDP moisture in the United States will obviously not be able to widen the gap with us like in the previous two years.
03
Since we have learned from the analysis above that nominal GDP includes inflation, when we look at China's GDP, only the actual growth rate after deducting price factors is the most objective.
In 2022, we will grow by 3%, while the growth rate in the United States has already been mentioned earlier, which is only 2.1%.
Since the beginning of this year, our growth rate (excluding prices) has been 5.2%, which has not yet been announced in the United States, but is estimated to be only within the range of 1-2%.
So there is no doubt that our economy has resumed a high growth rate, and the strength of the recovery is becoming stronger and stronger.
Moreover, a series of recently released data indicate that our economic growth is becoming increasingly healthy.
The most important sign is that among the three carriages, domestic demand is increasingly evident in driving the economy.
Another point that may not be ignored at any time is that when comparing GDP, the US dollar valuation method is used.
If the United States has to cut interest rates in 2024, the exchange rate of the US dollar will significantly decline, and this alone factor may significantly reduce the GDP gap between the two countries.
The above may only be predictions at present, but we only have less than a quarter left until 2024, and soon everyone will realize that this is no longer a prediction, but will become a conclusion.
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