In the first three quarters of 2023, economic data from the United States and China have been released and the gap continues to widen?
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GDP growth in the United States in the first three quarters of the year was 2.4 per cent.
On 26 October, the United States Department of Commerce released preliminary economic data, with an annual rate of growth of 4.9 per cent in the third quarter, more than double the rate in the second quarter and the highest rate of growth in recent two years. The United States economy thus showed very strong resilience.
After removing price movements at a year-on-year rate, real growth of 2.7 per cent was recorded in the third quarter, with a completed GDP of $6920.7 billion, or nearly $7 trillion.
The United States GDP rose by 2.1 per cent in the first quarter of the year and by 2.5 per cent in the second quarter, which means that the rate of growth is rising and the economy continues to be better.
Combined, GDP in the United States reached $20,269.8 billion in the first three quarters, an increase of 2.4 per cent over the same period.
Over the years, a number of media and experts have predicted that the United States economy is going to decline, saying in 2020 that the United States was in a technological recession, and that the real recession was coming soon, but not yet.
In 2022, as a result of continued US interest rates, the Russian-Ukrainian conflict, etc., they predicted a recession in the United States economy in 2023, particularly the March crisis in the United States banking sector, and the effects of possible defaults on US debt, but the result seems to be the opposite. Instead of a recession, the United States economy has grown strongly.
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What did America do right?
What was the right thing to do when the United States economy was growing more than expected?
Two things were actually done, one to secure employment and the other to secure prices. These two events directly affect the consumption of United States residents, which contributes about 70 per cent of GDP in the United States.
In other words, economic development can be promoted by promoting consumption. For people to consume, they have to have money, so more work and lower prices are the best medicine.
During the epidemic, the United States made repeated money out of 1,400 dollars to Americans, directly stimulating consumption. There was also a $2 trillion “discovery” programme, which had brought millions of highly paid jobs and substantially addressed the problem of unemployment.
The unemployment rate in the United States continued to decline, with 336,000 new jobs in the non-agricultural sector in the United States last September, well above expectations and on average over the past year, with unemployment at a level of 3.8 per cent and at a low level.
Unemployment is low and the labour market remains tense, which means that the job market offers more than demand and that there are many vacancies.
According to the latest news, the American Automobile Workers Strike was won and the Ford Car reached an agreement that gross pay would rise by more than 33 per cent in the coming years, with a substantial increase. Revenues have increased and consumption has increased.
The other is to reduce inflation and stabilize prices. Since March 2022, the Federal Reserve has raised interest rates as many as 11 times, and the CPI has actually fallen, at a rate of 3.2 per cent, 3.7 per cent and 3.7 per cent, respectively, from July to September. Although not comparable to about 2 per cent before the outbreak, it is true that there has been a significant decline, with the United States currently maintaining the lowest level of inflation in the G7 countries.
Following these two missions, the United States witnessed a very strong growth in personal consumption, which in July and August increased by 6.2 per cent and 5.9 per cent, respectively. Individual consumption expenditure increased by 4 per cent throughout the third quarter, well above the 0.8 per cent increase in the second quarter.
Private consumption contributed 2.69 percentage points to GDP growth in the United States, private investment contributed 1.47 percentage points and government consumption investment contributed 0.79 percentage points, three of which were the main drivers of growth in the United States.
Another source of concern is the volume of imports and exports, which increased by 3.4 per cent in July, with imports increasing by 4.7 per cent, and exports increasing by 2.1 per cent and imports by 4.4 per cent in August. In terms of trends, United States exports are growing at a narrow and fast pace, and imports are shrinking at a slow pace, which means that demand for imports is weakening.
High economic growth and weaker import demand? There seems to be some contradiction. But it is quite understandable, because the US has been working on a return to manufacturing for several years, not only bringing US firms home, but also forcing many high-tech firms to build plants in the US.
About 85 per cent of United States manufacturing is projected to be moving back to the United States mainland by 2030. As a result, the United States would not only add many jobs, but would also be able to satisfy a large number of goods without import.
This series of operations by the United States will drive the economy to continue to develop, but it will be a profit for countries that rely heavily on overseas markets.
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Is the gap between China and the United States widening?
Before the United States, we had published economic data for the first three quarters. Our GDP growth of 4.9 per cent in the third quarter, compared to 5.2 per cent in the first three quarters, also exceeded expectations.
Our total GDP in the first three quarters was 91.3 trillion yuan, or 13,016 trillion dollars at the exchange rate. By contrast, our GDP corresponds to 64.21 per cent in the United States, and the gap seems to continue to widen.
However, this gap must be viewed rationally, mainly because of exchange rates. In the first three quarters of the year, the average exchange rate between the renminbi and the United States dollar was “7.0148 to 1,” which represented a 5.82 per cent depreciation compared to 6.6068 during the same period of the previous year.
For example, Japan’s annualized GDP growth rate of 6 per cent in the second quarter, which is double the previous economist’s forecast of 2.9 per cent, is much higher than expected, and Japan’s economy suddenly burst, but it is not expected that the overall GDP ranking will fall to the fourth highest in the world, surpassed by Germany, owing to the disproportionate depreciation of the yen.
China and the United States have their own growth paths, and there is no need to dwell on numerical comparisons, to know that our GDP growth in the first three quarters was still more than double that of the United States. The United States dollar is unlikely to remain high, and the gap will narrow as exchange rates change.