Macroscope | Why the world is waiting for a sharp slowdown in the US economy
- The Fed’s abrupt shift in policy has wreaked havoc on markets the world over, pummelling currencies, bonds and commodity prices
- The US central bank’s fight against inflation is likely to inflict more pain on other countries, unless the American economy slows enough to force an end to the tightening campaign
As the global economy and markets come under severe strain, policymakers in developed and developing countries look upon the United States with a mixture of envy and indignation.
What is more, the US economy is performing relatively well at a time when other leading economies are slowing rapidly or have slipped into recession. The US added a further 315,000 jobs last month, causing total employment to surpass its level before the eruption of the Covid-19 pandemic.
On Tuesday, reports showed US consumer confidence rose for a second straight month in September to its highest level since April, buoyed by the sharp fall in petrol prices. More surprisingly, new home sales surged 29 per cent year on year in August despite the steep rise in mortgage rates.