Page 17 - THE SOUTH CHINA BUSINESS JOURNAL
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onth Treasury bill it is now appears ready to cut rates again should upcoming
just above the 2-year note, another data warrant such a move.
common metric. Despite some
retrenchment, the bond market’s Although the U.S. is faring better than other
recession call is consistent with developed countries, one notable area of concern
private sector forecasters’ estimates is that current budget deficits are especially
of recession probability over the elevated for a non-recessionary period and the
next year. debt is on an unsustainable path. In its latest
analysis, the Congressional Budget Office projects
Part of the uncertainty lies in that debt held by the public will almost double
the analysis of current economic between 2018 and 2029, rising from 78% of GDP
conditions. Real GDP slowed to to 95.1%. One small bit of salutary news is that
2.0% in the second quarter from the recent budget agreement postpones conflict
3.1% in the first. Although the over the debt-ceiling until 2020. Nevertheless,
pace was significantly slower in current debt levels are unsustainable and far too
the second quarter, most of the little attention has been given to this issue.
difference is actually accounted for
by a drop in business inventories Although recession fears have been rising,
to a level more consistent with its as evidenced by another decline in business
historical average. Nevertheless, confidence and resultant drop in the stock market,
growth will likely not surpass 2.0% the U.S. economy has remained resilient. It’s time
through the remainder of the year. to give American businesses a renewed reason for
optimism by working across the aisle to pass much
The Chamber would like to see needed legislation. U.S. Chamber of Commerce
policies that bring growth closer CEO Tom Donohue recently proposed three key
to 3%, but relative to developed reforms in his recent Washington Post op-ed.
countries in the rest of the world,
the U.S. economy has been a Donohue called for the administration
clear bright spot. This appears to end the current tariff escalation and
to be the primary concern and negotiate with China for a long-term,
difference between the stock and sustainable trade deal, Congress should
bond markets. While the stock pass the United States-Mexico-Canada
market has largely shrugged off Agreement (USMCA), and he wrote that
international developments, the “if Congress really wants to show that it’s
inverted yield curve is a warning committed to keeping the economy on
that the U.S. is not immune from track, it should enact an infrastructure
slower growth abroad. bill. That would boost Main Street
confidence in untold ways.”
Policymakers have already acted
to stem further deterioration in These policies all warrant bipartisan support and
sentiment. The Federal Reserve has would provide a needed jolt to the economy.■
shown a willingness to offset global
weakness through rate cuts and South China Business Journal 14
just above the 2-year note, another data warrant such a move.
common metric. Despite some
retrenchment, the bond market’s Although the U.S. is faring better than other
recession call is consistent with developed countries, one notable area of concern
private sector forecasters’ estimates is that current budget deficits are especially
of recession probability over the elevated for a non-recessionary period and the
next year. debt is on an unsustainable path. In its latest
analysis, the Congressional Budget Office projects
Part of the uncertainty lies in that debt held by the public will almost double
the analysis of current economic between 2018 and 2029, rising from 78% of GDP
conditions. Real GDP slowed to to 95.1%. One small bit of salutary news is that
2.0% in the second quarter from the recent budget agreement postpones conflict
3.1% in the first. Although the over the debt-ceiling until 2020. Nevertheless,
pace was significantly slower in current debt levels are unsustainable and far too
the second quarter, most of the little attention has been given to this issue.
difference is actually accounted for
by a drop in business inventories Although recession fears have been rising,
to a level more consistent with its as evidenced by another decline in business
historical average. Nevertheless, confidence and resultant drop in the stock market,
growth will likely not surpass 2.0% the U.S. economy has remained resilient. It’s time
through the remainder of the year. to give American businesses a renewed reason for
optimism by working across the aisle to pass much
The Chamber would like to see needed legislation. U.S. Chamber of Commerce
policies that bring growth closer CEO Tom Donohue recently proposed three key
to 3%, but relative to developed reforms in his recent Washington Post op-ed.
countries in the rest of the world,
the U.S. economy has been a Donohue called for the administration
clear bright spot. This appears to end the current tariff escalation and
to be the primary concern and negotiate with China for a long-term,
difference between the stock and sustainable trade deal, Congress should
bond markets. While the stock pass the United States-Mexico-Canada
market has largely shrugged off Agreement (USMCA), and he wrote that
international developments, the “if Congress really wants to show that it’s
inverted yield curve is a warning committed to keeping the economy on
that the U.S. is not immune from track, it should enact an infrastructure
slower growth abroad. bill. That would boost Main Street
confidence in untold ways.”
Policymakers have already acted
to stem further deterioration in These policies all warrant bipartisan support and
sentiment. The Federal Reserve has would provide a needed jolt to the economy.■
shown a willingness to offset global
weakness through rate cuts and South China Business Journal 14
