The United States could face a recession next year once the impact of tax cuts imposed by President Donald Trump wears off, a top analyst in Hong Kong has warned.
“If you look at the latest consumption numbers in the United States, they were flat for the month of May. They had been expected to rise by 2.4% on an annual basis. So, that is a real difficulty, because you can’t win a [trade] war if your whole homefront is collapsing on you,” Uwe Parpart, chief strategist at Capital Link International, told CNBC.
“The savings rate in the United States is essentially zero. The US consumer has no fallback position… Gasoline prices have increased massively … and the US consumer is tapped out. So that is a very real problem.”
Parpart said Ben Bernanke, chairman of the US Federal Reserve from 2006 to 2014, had aired such a concern a month ago, saying the good times currently enjoyed in America could end “as soon as the tax-cut impact on the US economy is actually fading”.
So, there was little likelihood of further rate hikes.
But the Chinese stock market appeared “close to bottoming out”, he said. “So, I think there’s a lot of buying opportunity in the Chinese market, but not in the United States.”
‘The US consumer has tapped out,’ says strategist from CNBC.
Meanwhile, there was also concern over Iran’s threat to block oil shipments in the Gulf – to block the Strait of Hormuz. That was an issue President Trump would have to discuss with Russian leader Vladimir Putin when they meet on July 16, he said.
The Iranians were upset at unilateral action by the US to reimpose sanctions because conservatives opposed the nuclear deal agreed to by the former Obama administration.
“This is going to be a renegotiation… the Iranians are not stupid and will hit back. I think a lot depends on the outcome of the [Trump-Putin] summit… there are some serious issues that have to be addressed.”
– Uwe Parpart is also editor of Asia Times
WHAT NO ONE IS MENTIONING IS THE CLOSURE OF THOUSAND OF RETAIL STORES NATION WIDE.THERE BY TAKING ACCESS TO GOODS BY THE POOR AWAY. THEY DO NOT USE COMPUTERS AND SEARCH STORE PHYSICALLY FOR MARK DOWN GOODS. THIS THE STUPID DUMB UNEDUCATED FOOLS WHO CALL
THEMSELVES ECONOMIST HAVENT A CLUE ABOUT. THIS IS A MAJOR OVERLOOKED SECTOR. AND TRUMPS TARIFFS COULD PUT MORE OUT OF BUS. IN THE SECMENT CATERING TO THE POOR SUCH AS ""DOLLAR TREE STORE"" !MORE TRAGEDY FOR THE POOR WHICH IS JUST FINE FOR THE TRUMP ELITE WHO RULE THE US.
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