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Is the U.S. Economy in Trouble? Chen Fengxin Reveals Three Major Risk Indicators

Is the U.S. Economy in Trouble? Chen Fengxin Reveals Three Major Risk Indicators Image reproduced from ETtoday 新聞雲

In the first half of 2025, the U.S. faced significant impacts from tariff changes and the outbreak of the Iran War, affecting the global economy and raising investor concerns regarding the state of the U.S. economy. Senior media personality Chen Fengxin discussed potential signs of deterioration in the U.S. economic fundamentals on her online program 'Winds of Change and Dragon Phoenix Matching.' While the economy has not yet entered a phase of negative growth, various troubling indicators suggest that investors should be cautious rather than overly optimistic.

According to Chen, the employment market in the U.S. is showing signs of struggle. The non-farm payroll report released in early June indicated an addition of 137,000 jobs in May, exceeding the expected 120,000. However, she cautioned that the reported figures may be inflated because of delays in reporting by small businesses. Additionally, significant downward revisions of employment numbers from March and April have raised alarms among economists, leading to concerns that the May figure of 137,000 may ultimately be revised down to around 100,000.

This 100,000 figure is not reassuring, particularly with a slight increase in the number of people seeking unemployment benefits for the first time, along with an increase in those continuously receiving unemployment benefits. These changes reflect a growing conservatism among employers in hiring. Various surveys, including those by the University of Michigan, the New York Federal Reserve Bank, and the Conference Board, indicate a decrease in public confidence regarding job availability, illustrating that the employment market is cooling amid rising concerns.

Moreover, consumption in the U.S. is increasingly showing signs of a downturn. Chen pointed out that the retail sales figures for May are particularly important, as approximately 60% of the U.S. GDP comes from consumer spending. Consumer spending declined by 0.9% in May compared to April, marking the largest drop in recent years. This decline was most pronounced in the auto sector, where rising tariffs have led consumers to adopt a cautious stance on vehicle purchases. The housing market is also showing declines in builder confidence, attributed to high interest rates and fluctuating stock markets that prevent a sustained wealth effect necessary for robust housing investment.

The restaurant sector has not been spared either, with dining expenditures falling by 0.9%, reflecting a trend of Americans tightening their budgets in response to economic uncertainty. Economists fear that cautious consumer behavior, combined with prior hoarding of goods, could result in even lower consumption levels in the future, as many households are already stocked up. Chen stresses that the recent FOMC (Federal Open Market Committee) meeting has drawn attention due to these developments.

Market expectations suggest that the Federal Reserve may freeze interest rates for the fourth consecutive time, yet speculation surrounding future rate cuts remains rife. The Fed releases its interest rate dot plot quarterly, reflecting officials' projections for the rate level by year-end. Current observations suggest that officials anticipate a two-rate cut by year-end. However, Chen argues that these projections may be meaningless, as several Fed officials have openly stated they are unsure of how to decide on rate cuts following a stalemate between hawkish and dovish perspectives. This uncertainty indicates that many variables still exist regarding potential rate cuts.

In conclusion, the data indicates a deteriorating overall economic environment in the U.S. Several indicators suggest that the economic landscape is trending downwards, yet the financial markets have not yet reacted appropriately. This raises concerns that if the economic environment worsens without corresponding reactions in the financial market, investors should remain vigilant and alert to changes.