Snow year, year of cattle. The Great Pandemic has left corporate America with historic goodness: the highest profit since 1950, rising by 35% in 2021. These gains were driven by strong household demand and intensive corporate investment plans. Two essential elements of domestic demand. Contributed to spending propensity, which contributed to extensive fiscal stimulus programs that mobilized $ 5 trillion to combat the impact of the pandemic. To this must be added the Federal Reserve’s access to cash-friendly loans, near-zero interest rates, and the introduction of sovereign and corporate debt and asset purchase mechanisms.
However, this half-full question that awaits the heyday of the planet’s largest economy leaves another more biased and disturbing perspective: an even deeper chasm in inequality. Employee compensation, in the form of pay or temporary wage increases, calculated on the basis of national average income, increased by 11%. It is a double-digit increase, but far from corporate income, in the inaugural year of the post-cash business cycle. Fiscal transfers and monetary anabolics have homogenized U.S. corporate earnings reporting, with profits exceeding 13% in all four quarters.
These milestones are special, given that he has only exceeded this level in three months in the last seventy years, in addition to the fact that he has created even more assets for the great wealth of the country. Jamie Dimon, CEO of JP Morgan, for example, made nearly $ 56 million in profits on the stock exchange.
Despite the health of the American private sector, the recession drum was heard among academics and market analysts. At Goldman Sachs, they even give a 35% chance of the US entering the red level in 2022. Former Treasury Secretary Larry Summers warns that this will not be the first contraction in US GDP with good business results and high. Job creation, which indicates a fall in negative territory after the 9/11 attacks.
Another cause for concern is a side message left by Federal Reserve Chairman Jerome Powell that wage tensions are advising us to further increase the price of money. Powell pointed the finger at rising demand for wage increases recently, but hides that wage growth has been modest and that they have barely risen by an average of 5.6% since March last year, up from 7.9%, reflecting the IPC. In February. Wage growth, which is even further away from the cost of gas, which has risen by 38%, and food, which is in a hurry to double in annual terms.
Harvard professor Jason Furman talks about his 20% chance of shrinking in the United States due to inflationary tensions in the US economy this year and the impact of Russia’s invasion of Ukraine. It also warns of skepticism that permeates the collective subconscious of the American consumer.
Justin Wolfers, an economist at the University of Michigan, warns us about this Red numbers “They are no longer a strange option,” he explains, adding that “they are not so close if the 431,000 new hires in the labor market in March and the Fed’s still-expanding monetary policy are taken into account.”
“With almost half a million jobs, they can not take the recession.” Even corporate profits, which approached 2.53 trillion in the last quarter of 2021, were 3.4% higher than in July-October, leaving net investment of 3.23 trillion and dividends of 1.47 trillion: 1.8% more than in the quarter. . Now, it’s not unfounded at the end of the year or in 2023, “if the war and its economic consequences continue to worsen the post-Covid cycle,” explains Wolfers. Business Insider.
“Perhaps one of the most pessimistic voices about the situation in the United States is Lawrence Lindsay, the former governor of the federal administration and director of the George W. Bush National Economic Council, for whom the economy is in recession this summer,” he said. It eats up all the spending potential of consumption, and recalls that “two points of purchasing power are lost, to which must be added the remaining 2.5, which fell in 2021.” In his opinion, “it is impossible to discuss this Shock “Without entering a recessionary phase,” he said in an interview CNBC. However, this option is being questioned by Robert King, director of research at the Jerome Levy Prediction Center, as Americans “have accumulated savings of about $ 4.2 trillion since the end of 2019.”
According to the Department of Labor, personal income in February fell by 2.6% in the last twelve months, which reduces inflation. In anticipation of the evolution of the March CPI, Stephen Stanley, chief economist at Amherst Pierpont, believes that as long as inflation “continues to decline in consumption, it is very likely that households will stop spending so intensively and steadily in 2021.” .
BlackRock – the manager of the world’s largest fund, with more than $ 10 trillion in assets in its investment portfolio – has warned that price tensions in the US could lead to a “sudden halt in the economy” due to Fed actions: more aggressive and lightning growth rates Can cause strong volatility and even stock market storms. As the second month of the war in Ukraine approaches, “there are still no signs of progress in the peace talks and the global economy is far from being affected by the conflict.
Jamie Dimon, CEO of JP Morgan, names three reasons for America’s appalling situation. First of all, unbridled government spending began to contain a major pandemic, estimated at $ 9.4 trillion, which led to “uncontrolled growth” of GDP and “inflation hotspots”, which were compounded by rising energy prices and the logistical crisis and trade disruptions. Second, in the aftermath of the war in Ukraine and after Western sanctions, “the Federal Reserve has allowed soft access to the acquired economy.” Finally, in close contact with the former, if retaliation against the Kremlin continues, “even higher price increases could occur in commodity markets,” especially oil and gas.
Dimon cuts US GDP growth by half a point to 2.5% this year, but warns that the US economy is not exempt from the more dramatic and unpredictable losses caused by global geopolitical and economic-financial uncertainty, which could create ” Potentially explosive situation. “.
In the labor order, the U.S. market continues to change due to the consequences of so-called large-scale resignations, the massive phenomenon of voluntary resignations after the end of social closure, as they do not obscure their quality of life aspirations. The situation has recovered, albeit through forced marches: more than 4 million Americans are leaving their jobs every month since last June, helping to raise wages as bait that employers have resorted to to meet their professional needs.
The San Francisco Federation has just published a study in which it intends to predict that this trend will decrease. End of epidemic, personal subsidies; But, above all, from a period of strong economic recovery and employment. All of this will put an epitaph on this behavior in a new chapter in the workplace, explains Bart Hobgin, its author.
However, while a noticeable pace of job creation is still observed, an intense propensity for trade unions has been established. In companies like Amazon and among multinationals and small companies in general, not only is the restoration of labor rights less guaranteed in Europe, but also the demand for wages in the face of a loss of purchasing power due to escalation. Inflation. “Government direct support for corporate profits in 2022 has left room for the private sector to continue hiring, but it has to be done with more generous pay,” said Jerome Levy, director of research at the Center for Forecasting.
Source: El Diario
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