A financial professional, Chuck (Atsushi) Kawakami (pictured) recently reported on the current state and outlook for the U.S. economy. MIRUPLUS pick up his analysis as follows;

The consensus forecast published in the British magazine "Economist" is that the growth rate of the United States in 2021 is currently 5.5%. This figure means that it will exceed the real GDP level of 2019, which was almost full employment before the pandemic, by 2.9%.

Indeed, a $ 1,400 stimulus check on individuals distributed in March has resulted in an excessive increase in retail sales in March. Real consumption, which was negative year-on-year until February, is expected to increase by about 20% year-on-year in March, which is scheduled to be announced at the end of April, and will reach a historically high level on a monthly basis.

There is no dispute that the U.S. government's $ 1.9 trillion fiscal expansion will result in a boost in the economy, but at least this increase in consumption is only transient.

In a structural sense, it is questionable whether the economic situation at the time of almost full employment in 2019 will really be reached. In the economy as a whole, exports from Japan in March were surprisingly modest, and there is a large gap between economic current situation and market reactions. 

Regarding the recent employment situation in the United States, looking at the employment statistics up to March, although the improvement has continued, the number of people who have been unemployed for 27 weeks or more has not changed.The number of people have been unemployed for 15-26 weeks has stopped decreasing.

It can be seen that employment improvement is becoming mottled. Looking at the movement in the number of unemployment insurance cases, the decrease in the number of unemployment insurance cases is becoming marginal these days.

In order to measure future employment improvement in the United States, I calculated how much employment increase would be necessary for the employment situation to return to the 2019 level.

Prerequisites are:

　●　Labor participation rate from 61.5% in March to 63%, which is close to the 2019 level

　●　Unemployment rate from 6.0% in March to 4.0% close to 2019 level

Based on this assumption, it is necessary to realize an increase in employment of about 7 million people compared to March 2021. I cannot help saying that this is a fairly high hurdle.

In general, the spread of digital technology will increase personnel efficiency, but given another pandemic that may occur in the future, it will continue to curb traditional human contact in society. This also affects employment.

Based on the above points, it is still doubtful whether the chain of employment improvement → income increase → consumption increase will be sufficiently completed. Considering that about 70% of the U.S. GDP is consumption, the recovery of consumption is a very big factor. I think it's too early to be too optimistic at this moment.

Chuck (Atsushi) Kawakami

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