Diagnosing the US Economic Crisis and Recession

Interest rate hikes initiated starting in 2022.
Inflation rate (CPI) hit a 41-year high of 9.1% in June. This is similar to the inflation surge following the oil shock in the 1980s.
Interest rate hikes are aimed at stabilizing prices. However, a slowdown in the economy is an inevitable direct or indirect result of interest rate hikes.

Macroeconomists: Analyze overall economic indicators such as prices, employment, and economic indices.
Microeconomists: Analyze detailed trends and impacts in specific industries (real estate, finance, etc.).
Technical Analysts: Focus on technical indicators, such as corporate R&D investments, to judge the strengthening of the US economic fundamentals.

Interest rate hikes ➡️ decreased corporate investment, employment slowdown, slowed wage growth ➡️ reduced consumption ➡️ economic slowdown.
2023-2024: A recession is tolerated, and strong interest rate hikes continue to stabilize prices.
2025: Potential for interest rate adjustments. Gradual downward adjustment (SOFT LANDING) or a slight economic slowdown are expected.

In high-inflation situations, increased unemployment is also tolerable.
Unemployment indirectly contributes to price stabilization.
However, there is a possibility of a policy shift to prevent cooling of the labor market from mid-2024 to the start of 2025.

Hard Landing: A rapid economic downturn. Requires significant interest rate cuts.
No Landing: No change in interest rates themselves. Stable.
Soft Landing (Goldilocks): Gradual interest rate cuts, a tolerated economic slowdown. The most likely scenario.

The US 10-year Treasury yield (market standard) is likely to stabilize downward after peaking in January 2025.
Bond prices rise when interest rates fall.
The attractiveness of investing in US bonds is expected to continue to increase.

US trade and tariff policies have the potential to cause economic instability.
However, tariffs are more likely to be used as tools for price stabilization rather than for increasing US inflation.
The Korean market may see changes in foreign investment inflows depending on whether political risks are resolved.

< Summary >

Interest rate hikes are continuing from 2022 to 2024 with the goal of price stabilization.
A gradual reduction of interest rates is expected starting in 2025 to prevent economic slowdown.
The US economy is likely to experience a SOFT LANDING, reducing the possibility of a sharp economic crisis.
The bond market provides investment opportunities as interest rates fall.
The Korean economy may be affected by the capital market depending on whether political risks are resolved.

[More…]

The Possibility of a Soft Landing for the US Economy
https://Next-Korea.com?s=economy
Investment Opportunities and Outlook in the Bond Market
https://Next-Korea.com?s=bonds

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Why It's Difficult for an AI Company Like DeepSeek to Emerge in South Korea

While South Korea produces excellent results in global competitions such as the International Olympiad in Informatics and the International Mathematical Olympiad, its talent pool is significantly smaller than that of China and the United States.
Many South Korean AI researchers tend to emigrate overseas, mainly due to relatively unattractive salaries and research environments in the domestic market.
Notably, a considerable number of talents at US universities are of Chinese origin, which highlights the strength of China's talent base.

It is rare in South Korea to find founders who possess massive capital and are deeply immersed in technology to lead a company like DeepSeek.
DeepSeek's founder, Yang Yuanfeng, amassed a huge fortune through a quant hedge fund and has been investing it generously in AI development.
In contrast, it is very difficult for founders in South Korea to secure the financial power to undertake large-scale technology investments, which is closely related to the limited size of the domestic market.

Researching and developing AI requires massive funding due to high costs such as high-performance equipment (like GPUs), research personnel salaries, and data processing.
DeepSeek secured a technological foundation by purchasing over 10,000 NVIDIA GPUs with its own capital from the early stages, but it is not easy for South Korean startups to afford such investments.
South Korean startups often rely on external investment, which makes them susceptible to commercial pressures.

Training high-performance AI models like deep learning requires massive amounts of data.
China can secure data from its huge domestic market and numerous internet users, but South Korea faces limitations in terms of data scale.
While Korean language data is relatively abundant, there is a lack of multilingual or video data necessary to secure global technological competitiveness.

In China, AI researchers are producing rapid results through extreme work intensity (6 days a week, working until midnight).
On the other hand, it is difficult to maintain a passionate AI research culture in South Korea, which may be due to a tendency to emphasize commercialization and short-term results rather than long-term research.

DeepSeek emphasizes independent research and supports a sharing culture like open source, which naturally attracts talented individuals worldwide to its research team.
South Korea's relatively closed research environment and commercially prioritized culture often fail to attract researchers.

South Korea is limited in talent base, founder leadership, funding, data, and research environment compared to China and the United States.
DeepSeek has established itself as a successful AI company based on vast funding power, the founder's technical vision, and a unique research culture.
For AI development in South Korea, long-term investment, talent inflow, and improvement in research culture are necessary.