US Economy Poised for “Shrinking Expansion” in 2025?

　　In a few years or just a few months, frustrated economists may come up with a variety of reasons why the U.S. economy did not fall into recession in 2023.
　　A U.S. recession in 2023 is arguably the most widely predicted economic event in modern history, but it’s safe to say that the U.S. will not experience a recession this year.
　　The reasons for saying this include: The streets of the United States are full of recruitment notices in stores of all sizes, and business friends told me that they can’t recruit people; data from the U.S. Federal Transportation Security Administration (TSA) shows that about 2.5 million airlines fly every day. Passengers pass through checkpoints at U.S. airports; hotel prices in most major U.S. cities are more than 10% higher than before the epidemic; U.S. stock markets are up 14% so far this year.
　　People say that the “black swan” is coming, but what is coming is actually a “white swan”. White is the color of most swans, which means that in most cases, the economy will grow and the stock market will rise. Furthermore, Warren Buffett’s famous quote still rings true: Never bet against America. Optimism is so scarce right now that prominent market commentator Zachary Karabell even created a podcast called “What Could Go Right?”
　　Is it too early to declare that there will be no recession in the United States in 2023? Maybe it’s a little early. If the “white swan” is attacked by some exotic bird, the U.S. economy may be severely damaged, but will the U.S. economy slide into contraction territory next? I do not think so.
　　Dr. Martin Luther King Jr. once said that although the arc of the moral universe is long, it eventually bends toward justice. Applying this sentence, we can also say that although the arc of the economic universe is very long, it will eventually bend towards growth. There must be some direct reasons for the continued growth of the U.S. economy, and it turns out that is the case, and there are many reasons.
　　Consensus forecasts for U.S. economic growth in the second quarter from top Wall Street economists have now risen to 1%, up from negative growth in early April, with forecasts from the Atlanta Fed’s GDPNow tool hovering around 2%. Although the expected economic growth rate is not high, the economy is moving in the right direction.
　　The University of Michigan’s consumer confidence index rose 8% in June. The survey report said: “The U.S. consumer confidence index hit its highest level in four months, reflecting that consumers have become more optimistic as inflation cools.” In American
　　society Spending by older U.S. consumers is growing rapidly after the largest increase in security benefits since 1981. While consumers are selective in their overall spending—spending mostly on restaurants, food, and travel, and not so much on cars and jewelry—we can discern a cautious, A “Goldilocks” consumption mentality, rather than a bubble-like splurge, is a positive phenomenon. As for the rich people who stock up on dollar store stuff, how do you think they ended up in this situation?
　　However, from a long-term perspective, the most positive fact is the introduction of three undervalued bills in the United States involving $2 trillion: the Infrastructure Investment and Jobs Act (Infrastructure Investment and Jobs Act), the “Creating Advantageous Semiconductors” The Creating Helpful Incentives to Produce Semiconductors and Science Act (CHIPS) and the Inflation Reduction Act.
　　While Kevin Pollari, leader of Deloitte’s infrastructure and capital programs for state and local governments, cautioned that some of the funding in the three bills will require incremental funding, he expressed concern that The outlook for these spending plans remains very positive.
　　Pollari said: “The impact of these funds on industries and industries is huge, and the momentum it creates is also huge. It has spawned a lot of economic activity. It is really unbelievable. I have worked with urban planning organizations across the United States. What came out of the meeting was that the number of projects was really, really staggering.” The
　　Brookings Institution called this “the beginning of the U.S. infrastructure decade,” said Joe, chief investment officer of Bank of America. “The U.S. is in the early stages of a manufacturing supercycle,” said Joe Quinlan, the chief executive of the U.S. Department of Agriculture. Quinlan cited renewable energy, electric vehicles and batteries and charging stations, semiconductors, ports, highways, power grids and airports, among other areas. invest. He predicts that annual spending on U.S. manufacturing construction will soar to nearly $200 billion this year, four times what it was a decade ago.
　　Foreign companies have taken notice. Quinlan pointed out that foreign direct investment in the United States has grown significantly, from $150 billion in 2020 to more than $350 billion this year, and is still growing.
　　Quinlan said: “For foreign companies, if you want a piece of the pie, you have to come to the United States. This reminds me of the 1970s, when Japan exported a large number of cars and home appliances to the United States, and later the United States There were export restrictions on cars, and then the Japanese jumped that hurdle and started making cars in Marysville,
　　Ohio (where Honda opened a factory in 1982) and other parts of the United States. There’s some similarity between now and then.” , a Belgian-French joint venture is planning to build a synthetic natural gas facility in Texas; Britons are also coming to the U.S., including British conglomerate Johnson Matthey (JMAT) and renewable energy company Drax , DRXGY). “Whether and when we become a majority-owned company in the United States may be something to consider,” Drax CEO said in an interview with The Times. The start of capital and company flows to the United States has
　　caused The concerns of the British and European Union (EU) legislative bodies are a big plus for the United States, and the resulting multiplier effect has been Washington’s intention all along.
　　All of this surprising growth has economists perplexed. Quinlan’s colleague Michael Gapen, chief U.S. economist at Bank of America, recently revised his forecast for the U.S. economy. He previously expected the economy to fall into recession in the second half of 2023 (thinking this recession will be only half as severe as a typical economic contraction), and now predicts a milder slowdown in the first half of 2024, Gabon even uses an oxymoron. France calls it a “growth recession.”
　　Perhaps we can also use an oxymoron to predict that the U.S. economy will experience a “shrinking expansion” in 2025.