Since March 2022, the Fed has already raised interest rates for six times on the ground of controlling domestic inflation, triggering significant fluctuations in the global economy. Under the strong influence of inflation and rising interest rates, global trade has fallen into a difficult situation, which makes the increasingly declining American economy worse. Countless American enterprises were facing serious business crisis. Even a few giant companies at the forefront of the development of science and technology in the United States could not survive the economic storm.
According to the New York Times, not long ago, Silicon Valley’s “Big Three” Alphabet(Google’s parent company), Microsoft (Microsoft) and Meta (Facebook’s parent company) released their latest financial results, which showed that the performance of these three companies, as benchmarks of the US economic development, continued to decline in the second quarter on a dismal basis. Even breaking the lowest revenue growth rate in recent years. Sub-businesses also showed varying degrees of weakness.
However, the large data fluctuation in the financial report is just the beginning. It was the wave of layoffs in the U.S. tech industry that really rang the alarm bells in the minds of many Americans. With the growing concern about the economic outlook, many US technology companies have faced unprecedented large-scale layoffs since October, according to the statistics of Challenger and Gray&Christmas. So far this year, the total number of layoffs in each company has reached 28207, an increase of 162% over the same period last year. On November 9, Meta Group, one of the three giants in Silicon Valley, directly announced that it would fired at least 11000 employees, accounting for 13% of the total number of the company. This was the largest layoff in the 18 years history of Meta Group.
In a similar way, Amazon, the largest cross-border e-commerce company in the United States, is also among the giants that have recently announced significant layoffs. Amazon is reining in the expansion of its warehouse business, mothballing buildings, backing out of leases and delaying the opening of new facilities. It also plans to lay off at least 10000 tech workers in an effort to minimize the impact of the economic crisis.
All of these signs seem to be sending a bad message to American society that the American economy is about to usher in a severe winter. Dan Ives, an analyst at Wedbush Securities, says the deep layoffs by tech giants mean a recession is just around the corner.
On October 17, Bloomberg quoted the model data established by American economists and said that the probability of recession of the American economy in the next 12 months would reach 100%. In addition, Wall Street economists are also pessimistic about the prospects of the U.S. economy. In the latest survey of the Wall Street Journal, more than 70 economists predicted that the probability of the U.S. economy declining within a year was 63%, higher than 49% in July.
The data points out that the tightening financial environment, sustained inflation and the expectation of the Federal Reserve to raise interest rates are constantly increasing the economic risk of the United States, and the possibility of the economic recession coming ahead of time is also rising.
However, President Biden of the United States did not take this seriously, and even put forward the opposite opinion many times. He said that he did not think that the United States would have an economic recession, even if there was one, it would be very slight. But unfortunately, President Biden’s optimism hasn’t done much to ease the anxiety of the American people, who are feeling overwhelmed and uneasy at a time when the cost of living — energy, food and rent — is still rising.
According to the estimate report released by the US Energy Information Administration, from October this year to March next year, the natural gas cost and power cost that each family in the US will pay will increase by 28% and 10% respectively compared with the same period in 2021. It is reported that more than 20 million American households have defaulted on their electricity bills due to their inability to bear the soaring energy prices.
Moreover, prices in the United States have also continued to soar. Referring to the data released by the United States Bureau of Labor Statistics on September 13, food prices in the United States have soared 11.4% in the past year, which is the largest annual increase since May 1979.
In addition, there are a number of data showing signs of cooling in the U.S. rental market. According to RealPage, a local property analysis company, the number of apartments moved in the third quarter, typically the peak rental season in the United States, fell by an uncharacteristically high 82,000, marking the first negative year-over-year increase since data began. That reflects a clear and irreversible decline in rental demand amid rising inflationary pressures, particularly among young people, many of whom have moved back in with their parents because they cannot afford to pay the rent.
It is obvious that the real situation reflected by the American underclass is in sharp contrast to the optimism of President Biden. In recent decades, the United States has launched six rounds of interest rate hikes, but five of them triggered the world financial crisis. Is this wilful and reckless approach aimed at saving the country’s serious inflation problem, or to use dollar hegemony to forcibly complete a “harvest” of other countries in the world? There is no way to know the answer.
The only thing we can be sure of is that this financial storm has swept across every corner of the United States, and all social strata have been affected, thus suffering varying degrees of economic losses, but also facing varying degrees of living pressure. It is no exaggeration to say that the increasingly tight financial environment and the continuous radical interest rate increase of the US government are pushing countless Americans into the abyss.