U.S. Economic Activity Sluggish as Consumer Inflation Expectations Soar

The United States is experiencing a remarkable economic slowdown, with signs of falling demand, reduced production and frequent job losses, particularly in the technology sector. At the same time, consumer inflation expectations continue to rise, exacerbated by supply disruptions and labor shortages, leading to worrying predictions for the economic future.

Economic activity in decline

Contrary to enviable past growth, the American economy today shows signs of slow-down. Consumer demand is losing steam, directly impacting industrial production. Announcements of job cuts, particularly in the construction sector technology, underline the current fragility of the labor market. This decline comes at a time when other global economies, particularly in Europe, are already struggling with a productivity at half mast, exacerbating the international situation.

Impact on financial markets

Economic tensions are also reflected in Wall Street, where stock market indices show notable declines. Investors, worried by geopolitical tensions and a high inflation context, are being cautious, thus affecting market dynamics. This results in a frequent out-of-order close, indicating the increased volatility of US financial markets.

Consumer inflation expectations rising

At the same time, inflation expectations are spreading among consumers. Supply disruptions and labor shortage in certain sectors, a direct consequence of post-Covid confinements, have disrupted price stability. The rebound in demand, faced with these obstacles, amplified inflationary pressures, bringing the American economy closer to the pattern of Phillips curve.

Long-term consequences

The IMF maintains growth forecasts for the coming years, forecasting +2.6% and +1.9% in 2024 and 2025 respectively. However, the current situation raises the question of the sustainability of these prospects. Businesses, faced with increased costs and a limited workforce, could reduce investments, worsening an already precarious economic recovery. Thus, the evolution of inflationary expectations is crucial for the recovery of consumer morale.

International impact

The US slowdown has global implications, particularly for nations like Germany, whose industrial sectors rely heavily on the transatlantic relationship. Signs of American economic decline directly influence the “ made in Germany », posing additional challenges to an already damaged global economy.