Page 24 - The South China Business Journal
P. 24
D.C. TODAY
? Decrease consumer confidence: Consumers That means if we do get the conditions needed
have been spending strongly for years now, in part to push growth to 3%, it will be harder to hit that
because their wages have grown above inflation mark than in the past because there wonĄŻt be
and their belief the economy will be better in the enough workers available for businesses to tap to
future. If continued policy uncertainty undermines meet growing demand.
their confidence, they could pull back on spending,
which would certainly slow growth. The Fed
Other Factors to Consider in 2026 The Federal Reserve is another factor to consider
in 2026. While some anticipate further rate
Recession reductions to spur faster growth, there is also
ample reason to believe that rates will remain
We wonĄŻt have a recession this year unless a large more steady.
shock occurs, like a pandemic or global financial
crisis. While there is always the chance something The FedĄŻs dual mandate requires them to work
big like that happens, such events are hard to towards stable prices and maximum employment.
predict. It is important to remember that slower Inflation remains stubbornly high and tariffs
growth is not the same thing as a recession. continue to work their way through to consumers
exerting upward pressure on the price level. At the
We could have slower growth in 2025 and 2026 same time, while job growth may have slowed,
than we had in 2023 (2.9%) and 2024 (2.8%), the unprecedented slowdown in the growth of the
but a recession is when the size of the economic labor force may mean that there is little room to
contracts for six straight months. Slower growth create more jobs. Given these pressures, it is not
is not good, and it can make the country feel surprising that the Fed signaled in its most recent
the economy is bad. But a recession brings with forward guidance that it is likely to hold rates
it more serious economic pain through high steady for several months while until we have a
unemployment and falling incomes. Both are better understanding of where inflation and labor
unlikely to occur outside of a recession. force are headed.
Workforce The Bottom Line
The U.S. labor market has fundamentally changed The economy is stronger than many surveys
in recent months. Because of declining population would indicate, and the economy will continue
growth from a lower birth rate and a slowdown to grow in 2026. With the right mix of policies,
in immigration and increase in deportations, we the economy can grow even faster. Businesses
only need to add 30,000 to 50,000 jobs a month to will want to prepare for a better economy
keep the unemployment rate steady. Not too long because they will need to be ready to hire
ago, we needed to create at least 125,000 jobs a and expand to take advantage of that faster
month to keep the unemployment rate the same. growth should it materialize.
21 AMCHAM SOUTH CHINA
