Boost Personal Demand, Adjust Energy Strategy, and Keep the U.S. Economy Growing

Although high international oil prices have had a certain adverse impact on U.S. economic growth this year, the U.S. economy still grew at a relatively strong pace in the first half of the year, and the growth prospects for the second half of the year are still good.

According to the latest report released by the U.S. government, the U.S. economy grew at an annual rate of 5.6% in the first quarter of this year, the fastest growth rate since the third quarter of 2003, when it grew by 7.2%. Among them, personal consumption expenditure, the main driver of economic growth, increased by 5.1% at an annual rate, which was also the fastest growth rate since the third quarter of 2003. Since the U.S. economy is a typical consumer economy, strong domestic demand provides impetus for sustained economic growth.

At the same time, U.S. corporate investment continues to grow strongly; export growth has accelerated while import growth has slowed, which has alleviated the "drag" effect of the trade deficit on the economy to a certain extent; the unemployment rate has also continued to decline, and has now fallen to 4.6%, the lowest level in five years; although the sharp rise in energy prices, especially oil prices, has put greater pressure on rising prices, the inflation rate is still at a relatively low level.

There are many reasons why the U.S. economy continued to grow at a relatively strong momentum in the first half of the year, two of which are particularly important: First, due to economic growth and reduced unemployment, especially due to investment in the real estate market, U.S. household income has steadily increased, thus providing Strong personal demand provides the impetus. Second, the adjustment of energy strategy has greatly enhanced the US economy's ability to cope with the impact of high oil prices.

Although the U.S. economy is in good shape in the first half of the year, the difficulties it faces cannot be ignored. If these problems are not handled properly, it may increase the risks to U.S. economic growth. First, inflationary pressure has increased significantly, and the impact of rising energy prices has begun to appear. Secondly, higher interest rates will have a negative impact on personal consumption and corporate investment. At present, the US federal funds rate, that is, the overnight lending rate between commercial banks, has risen to 5.25%, the highest level since the end of January 2001. This will inevitably have a certain impact on U.S. consumption and investment. It is particularly worth pointing out that the increase in short-term interest rates in the United States has led to a continued rise in long-term interest rates, and interest rates on mortgages, which are mainly used to purchase houses, continue to rise. A report released by the Federal Home Mortgage Corporation on the 6th of this month showed that the 30-year mortgage interest rate in the United States has risen to 6.79%, reaching the highest level in more than four years. The continued rise in mortgage rates is bound to have a cooling effect on the U.S. housing market.

According to the latest economic growth forecast released by the White House last month, the U.S. economic growth rate will reach 3.6% this year, and is expected to be 3.3% and 3.2% respectively next year and the year after. Since energy prices are expected to be at a high level, the price increase will also be higher than originally estimated. It is expected to exceed 3% for the whole year this year, but it will not get out of control. Therefore, the U.S. economy will be on a sustainable growth track this year, and major problems are unlikely to occur in the short term.