Amidst Economic Uncertainties: Half of American States Suffer from Recession and USD Faces Challenges
The United States economy is currently grappling with a multifaceted crisis, with implications reaching far beyond its borders. Recent economic data paints a concerning picture as half of the American states are experiencing a recession. This prolonged period of economic downturn can lead to a decrease in consumer spending, rising unemployment rates, and overall economic instability.
The Imminent Collapse of the US Dollar
In conjunction with these economic challenges, the United States dollar (USD) is facing significant pressure. Despite its historical dominance, the American Dollar’s hegemony is being challenged due to various economic and political factors.
Expert Analysis: 22 American States in Economic Recession
A recent analysis by financial expert Game of Trades revealed that no less than 22 American states had economic contractions in the fourth quarter of 2023, while only 20 were growing. This is one of the lowest levels since 2020 and historically has been associated with recessions.
These states, now known as being in an economic recession, are experiencing repressed economic growth, with measures such as state unemployment rates, average manufacturing hours worked, real wages, and nonfarm payroll employment hitting rock bottom.
The Combination: US Recession and USD Challenge
“Recessions don’t occur overnight, with all states simultaneously entering one. Weaker and more vulnerable states tend to be the first to experience a recession. Once a certain threshold is reached, it becomes inevitable that other states will follow suit.”
Game of Trades emphasizes that the nation may soon enter its formal recession phase, as 22 of its states are already experiencing economic difficulties and unexpected swings.
US Dollar Weekend Forecast
The American Dollar enjoyed greater stability over the past week, registering its second consecutive week of gains and reclaiming the region where the DXY index was closely monitoring its decline to 104.00.
Interestingly, this weekly gain in the American dollar was accompanied by a decline in momentum during the recent rally in American yields across multiple time frames. This downturn seems to have accelerated since the FOMC meeting, although it was largely propelled by the substantial depreciation in the Japanese Yen.
This trend was further exacerbated by the BoJ’s dovish rate rise earlier this week. The Greenback’s weekly price movement was primarily influenced by the FOMC report released on March 20.
The Federal Reserve (Fed) maintained its anticipated fed funds target range (FFTR) of 5.00% to 5.25%. The Committee also raised its interest rate projections for 2025 and subsequent years, as well as its core Personal Consumption Expenditures (PCE) estimates for 2024.
Investors are now focusing on the release of another inflation data, this time from Personal Consumption Expenditures (PCE), at the end of next week. Other crucial indicators, such as another revision to the Q4 GDP Growth Rate, Durable Goods Orders, weekly Initial Jobless Claims, and the final Michigan Consumer Sentiment gauge, will also be released during this period.
