U.S. GDP for October to December last year to be announced on the 25th, perhaps showing the robustness of the economy?

America's GDP (gross domestic product) from October to December last year will be announced on the 25th.

There is a widespread view in the market that this will be the 6th consecutive quarter of positive growth, which is likely to demonstrate the robustness of the American economy even with high interest rates.

America's GDP from October to December last year will be announced at 10:30 pm on the 25th Japan time.

The latest data from the Federal Reserve Bank of Atlanta, which announces GDP forecasts, shows that the real growth rate compared to the previous three months is an annualized increase of 2.4%. , market forecasts indicate that there will be a sixth consecutive year of positive growth.

The year-end sales season is strong, with retail sales exceeding the previous month for two consecutive months until last month, with personal consumption accounting for approximately 70% of GDP driving the overall economy, and government fiscal spending increasing. It has been pointed out that factors such as the fact that

There is speculation in the market that the Federal Reserve will begin lowering interest rates at its meeting in March this year, but there is also a view that the start of interest rate cuts will be delayed if the US economy continues to be strong, so the details of GDP will likely be the focus of attention. is.

Future outlook: What do experts think?

We asked Michael Feroli, chief economist (covering the US economy) at JP Morgan, about the outlook for the US economy and the Federal Reserve's future monetary policy.

Q: What is the forecast for the growth rate of GDP = gross domestic product in the fourth quarter?

A: We expect it to be around +2%, or slightly above 2%.

This is stronger economic growth than we expected a few months ago.

Although it is difficult to analyze, one of the factors is thought to be the government's aggressive fiscal spending.

Fiscal spending is less affected by the Fed's interest rate hikes, and many jobs are actually increasing in the government sector.

However, I believe that the housing sector and capital investment, which are sensitive to interest rate trends, are being affected by the Fed's interest rate hikes.

Q: The US economy is strong, but the budget deficit is large. What is the future outlook and impact on the economy?

A: It is a cause for concern that the country continues to run a deficit of around 6% of GDP in a situation where full employment has been achieved.

However, it is politically difficult to take action to reduce the fiscal deficit immediately, and it is unlikely that there will be any major changes in fiscal policy going forward.

Therefore, in the long term, the fiscal deficit issue becomes a worrying risk.

Q: What do you think about the future outlook and risks for the US economy?

A: Going forward, we expect the economy to decelerate, given that fiscal spending will decrease little by little and the impact of the Federal Reserve's monetary tightening will spread.

Geopolitical issues (such as the situation in the Middle East) are also a concern.

It is difficult to imagine that the rise in energy prices, which has been avoided now, will be avoided in the future.

Q: When do you think the Fed's monetary policy will start lowering interest rates?

A: We expect to start cutting interest rates in June and then cut rates a total of five times at all meetings throughout the year.

I'm a little surprised that the market expects interest rates to be cut as early as March.

The labor market remains extremely tight, with the number of jobless claims reported on Wednesday at the lowest in nearly two years, and the Fed will likely be cautious in deciding when to cut interest rates.

The Fed also expects the pace of its quantitative tightening, which reduces financial assets such as government bonds held by the Federal Reserve, to slow down after its March meeting.

As in 2019, we will likely see a pattern of slowing down before stopping 'quantitative tightening'.

Q: What should we focus on when looking ahead to future monetary policy?

A: I think we should pay attention to labor market data.

If job growth were to slow rapidly, the Fed could decide to cut interest rates significantly.