Growing recession trend in major economies

The world’s major economies have been hit hard by governments’ “let’s rip” policies against COVID-19, rising inflation and high interest rates imposed by central banks aimed at crushing workers’ wage demands. In the aftermath of the recent turmoil, the trend toward recession is intensifying. .

Shoppers wearing masks look at meat products at a Dallas grocery store on April 29, 2020 amid concerns about the spread of COVID-19. (AP Photo/LM Otero, File)

The US, the world’s largest economy, has experienced a second straight quarter of negative growth and shows signs of further contraction ahead as rising prices of basic commodities hurt consumer spending. .

The impact of COVID is reflected in employment and labor market data. The U.S. workforce is 600,000 fewer than he was when the pandemic began in 2020. wall street journal A recent article states, “Adjusting for population growth is a few million smaller.” The number of workers has fallen by 400,000 since March.

The labor force participation rate (the percentage of the population aged 16 and over who is working or looking for work) continues to decline. He dropped from 62.4% in March to 62.1% in July. Before the pandemic, it was 63.4%.

The hit to the US economy is also reflected in economic output data. Second-quarter gross domestic product fell 2% below his January 2020 forecast, according to Congressional Budget Office projections. Employment was also 2% below forecast, with about 3 million jobs lost.

At the same time, inflation is currently hovering between 8-9% and essential food items are up more than 13% over the past year. While wages have risen, they have lagged inflation, with the average worker’s wages falling 3.6% in real terms. This means that consumer spending, which accounts for up to 70% of US GDP, is under downward pressure.

China, the world’s second-largest economy, has experienced a significant slowdown in economic growth. The economy grew just 0.4% in the second quarter, narrowly avoiding a full contraction, and the outlook looks worse.

China’s premier Li Keqiang on Tuesday met with local officials from six of China’s main provinces, which account for 40% of the country’s economy, to bolster growth after weaker-than-expected July data on consumption and industrial production. requested that the measures be taken.

China’s deteriorating economic outlook is the result of a global pandemic, which the Chinese government, in contrast to all other governments, is fighting to control. It is also due to the sharp decline in the real estate market.

The central bank’s decision to cut medium-term interest rates to stimulate the economy came as Premier Li appealed to local authorities to do more and promised the central government would take steps to boost growth. It was later.

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