A truly historic turning point has indeed arrived. Just yesterday, the Federal Reserve released the latest edition of the Beige Book.
According to the Beige Book, in the six weeks ending October 14th, out of the Federal Reserve's 12 districts, 3 reported economic growth, while 9 reported economic activity remaining flat or declining, with both numbers remaining consistent with the previous period. In simple terms, this means that the U.S. economy is mired in a state of persistent weakness.
The Federal Reserve's Beige Book is published 8 times a year, summarizing economic conditions based on surveys from its 12 regional Federal Reserve Banks. So why does the Federal Reserve conduct its own economic data survey? To put it bluntly, the Federal Reserve has long stopped trusting the data from the U.S. government. Or rather, the Federal Reserve is also in a game of chess with the U.S. government.
So why, upon the release of this Beige Book, do I say that a historic turning point has arrived?
Firstly, this month, the U.S. government has announced six major economic data points: August job vacancies, September ADP employment figures, September non-farm employment numbers, September unemployment rate, September CPI, and September retail sales growth rate. We have discussed these specific figures many times before, so I won't repeat them here. Suffice it to say, all have exceeded expectations.
Advertisement
In other words, the economic data for September in the U.S. may not reflect the true situation. Let's think about this in reverse: if the U.S. economy is truly so strong, then why would the U.S. need to lower interest rates?
When is it necessary to lower interest rates? That would be during times of economic weakness. If the economy is strong, it should be raising interest rates to curb inflation. So, lowering interest rates inherently signifies a downward economic trend. Up until now, everyone has been contemplating whether the U.S. economy could achieve a soft landing and whether the U.S. economy is truly in recession.
Now it appears that, despite the U.S. government's best efforts to conceal the truth, a significant recession is inevitable. The U.S. is the world's largest economic superpower and the largest consumer entity. If the U.S. economy goes into recession, is that good or bad for us?
However, if we change our perspective, for us as individuals, this is actually a very good opportunity. Because an economic recession means a chance for a reshuffling of the deck.
It's similar to the stock market; only after a significant drop can there be a significant rise, and the transition from a significant drop to a significant rise is a reshuffling of the deck. Now that we have confirmed the U.S. economy is in a continuous recession, it means that lowering interest rates is definitely not lukewarm. Recently, the U.S. has been sending signals of cautious interest rate cuts.However, if we think in reverse, what the United States says is not important, and what they do is also not important. The most critical thing is what does the United States really want?
Last week, the European Union also announced that it would continue to lower interest rates, and Canada announced a one-time reduction of 50 basis points today. The world has entered a comprehensive interest rate reduction cycle. The United States cannot bear it alone.
After the big interest rate cut comes the big inflation, which is reshuffling. For ordinary people, if you want to get on this wealth train, you must at least ensure that you are at the table. If you don't even have cards in your hand, how can you have the opportunity to change your destiny?
Leave A Reply