Qatar National Bank “QNB” expected that the US economy would witness a gradual and orderly decline, supported by household consumption, which remains one of the strongest sectors in the US economy and benefiting from the recovery of labor markets and strong balance sheets.
The weekly report of Qatar National Bank indicated the resilience of the US economy in the face of increasing economic challenges, including high inflation, high interest rates and tightening credit conditions.
He pointed to the continued coherence of consumer spending, which constitutes about 68% of GDP, despite the difficult economic conditions, as consumer spending recorded strong growth in the first quarter of this year at a real annual rate of 3.8%, which is much higher than the average growth of 2.5%. % over the previous five years prior to the coronavirus (COVID-19) pandemic, while retail sales (inflation-adjusted) are still approximately 6.8% higher than the pre-pandemic trend.
The report attributed the relationship between consumption support and the soft decline in the United States to two main factors: the first is related to the still solid labor market, as all signs of decline remain marginal compared to typical recessionary dynamics.
He pointed out that the unemployment rate moved in the current year, in a range between 3.4% and 3.7%, i.e. at a level close to the historical minimum limits. He indicated that in periods of relatively moderate recession, similar to what happened in 1990 and 2001, unemployment rates increased by about 1.6 percentage points, while during the global financial crisis between 2007 and 2008, it more than doubled from 4.6% to 10%.
The report also predicted that unemployment rates could rise either because existing jobs are eliminated at a greater rate or because companies create new jobs at a slower pace, leading to unemployed workers having to spend more time looking for work.
The bank noted that at the present time, neither the process of creating new jobs nor the process of eliminating existing jobs, shows clear signs of a deterioration in the labor market.
In a related context, he pointed to the increase in non-agricultural jobs on average by 314,000 jobs per month so far this year, which is much higher than the average recorded before the (Covid-19) pandemic, which amounted to 177,000 jobs during 2018-2019.
The report was based on the Job Opportunities and Employment Turnover Survey (JOLTS), which showed that the decline in the level of vacancies, compared to the peak recorded in March 2022, is still much higher than the levels that prevailed before the pandemic, and the rate of dismissal of current jobs does not indicate any signs of deterioration. sharp.
With regard to the second factor mentioned in the report regarding the trend of the US economy towards a soft decline, it is represented by the continued strength of household consumption supported by the balance sheets, as families have a large amount of money that will allow them to support personal spending until at least the last quarter of this year, which avoids any occurrence A sharp decline in consumption.
The report pointed out that the accumulated stock of surplus savings reached nearly $2 trillion in the period that began in February 2020 until August 2021, while about $300 billion is still available after it was withdrawn from it until April of 2023, about $1.7 trillion. .
