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US Economy and Financial Flows

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Economic Polarization and the US Job Market

• Deepening Polarization
  The US economy is experiencing a deepening polarization between the top 50% and the bottom 50%.
  The lower classes, in particular, are facing challenges in the job market and consumer environment, and consumer finance conditions, such as credit card loans, are becoming more stringent.

• Increase in Credit Card Delinquencies
  Credit card loan delinquency rates, which have surpassed pre-COVID levels, suggest that the financial health of the lower classes is deteriorating.
  This can also be seen as banks taking a negative view of consumers' financial situations.

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Long-Term Interest Rates and Their Impact on the Overall Economy

• Rising Long-Term Interest Rates
  Long-term interest rates remain high, driving up mortgage rates, auto loan rates, and credit card loan rates in the US.
  The rise in long-term interest rates is directly impacting the US real estate market, resulting in a decrease in housing transactions and housing starts.

• Tightening Effect
  The rise in long-term interest rates is causing a tightening effect on the overall economy and is expected to gradually impact the real US economy.
  In particular, the real effects of this are likely to become evident in the second quarter of 2024.

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Trump's Policies and the US Economy

• Improvement in the Trade Balance
  Trump is likely to pursue policies to strengthen domestic companies and reduce the trade deficit.
  This could lead to the recycling of dollars within the US, which may have a positive impact on the stock market and the job market.

• Relaxation of Financial Regulations
  Trump's policies are expected to focus on easing financial regulations, especially for small and medium-sized banks.
  This would allow banks to manage more assets and increase their role in the bond market.

• Stabilization of Bond Market Supply and Demand

If an environment is created where banks can adjust the supply and demand for short-term and long-term bonds, stabilization of bond interest rates can be expected.
This would reduce uncertainty and potentially lower long-term interest rates to appropriate levels.

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Current Situation and Outlook

• Weakening Dollar and Stabilization of Long-Term Interest Rates
  As Trump's policies take hold, the pace of interest rate hikes is likely to slow.
  The elevated long-term interest rates can also be lowered through policy adjustments and market stabilization.

• The Other Side of Economic Indicators
  Detailed analysis of US unemployment rate data reveals that despite surface-level growth, challenges for the lower classes remain.
  This is a crucial signal that could create a rift in US society and economic structure in the long term.

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< Summary >
The US economy is experiencing a widening polarization between the upper and lower classes.
Elevated long-term interest rates and financial regulations are exerting a tightening effect on the real economy and impacting the real estate and loan markets.
Trump's policies may improve economic indicators by improving the trade balance and easing financial regulations but are likely to leave the lack of support for the lower classes as a continuing problem.

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• Crafted by Billy Yang
• [More…]

1. Ripple Effects of Reducing the US Trade Deficit
2. Outlook on Financial Deregulation Policies and Bank Stocks

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