In recent years, the United States has been fond of playing "word games" when releasing economic data. Not only does it frequently release false economic data, but it also likes to make significant revisions to the data in subsequent adjustments. Now, this situation is being replayed.

The U.S. Department of Commerce has revised the GDP data.

According to the latest data from the U.S. Department of Commerce, the U.S. GDP for the fourth quarter of last year was unexpectedly revised down to an annualized 3.2%, which was below expectations. This means that the actual growth rate of the U.S. economy at the end of last year was not as good as we had judged.

Moreover, the core PCE data for the United States last year, which is the core personal consumption expenditure data, was revised to 2.1%, exceeding market expectations. This means that the inflation data in the United States is worse than we imagined.

Is the U.S. economy heading towards "stagflation" with the downward revision of economic growth and the upward revision of inflation data exceeding expectations? Let's talk about this topic today.

The downward revision of the U.S. GDP growth rate, the United States pays the price for economic development.

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Since two years ago, discussions about the U.S. economy falling into "stagflation" have been ongoing. For the United States to fall into stagflation, two conditions are needed. One is the slowdown of economic growth, with the economy tending towards stagnation; the second is that the U.S. inflation data skyrockets and accelerates.

Looking at the data from the end of last year, the U.S. fourth quarter annualized 3.3%, and the inflation data monthly rate was 0.2%, indicating that the U.S. economy was good and the inflation level was well controlled.

In the fourth quarter of last year, the U.S. GDP annualized rate was 3.3%, which greatly exceeded market expectations.

However, although the U.S. data was released, it was revised, as we saw in the previous text, with the GDP annualized rate being revised down and the inflation data being revised up. Both major data did not meet expectations.Let's first examine the issue of the United States' economic growth rate. The revised U.S. GDP for the fourth quarter is an annualized 3.2%, which is a decent figure. However, the growth rate after the downward revision falls short of market expectations. In simpler terms, the U.S. economy is not as booming as imagined.

From the perspective of investment analysts, looking at details such as U.S. corporate investment and consumer spending on durable goods, the U.S. economic environment is actually much more fragile than the market anticipated.

Although compared to other European economies, the U.S. economic growth rate is indeed impressive, there is a premise: the U.S. economic development is based on the massive issuance of U.S. Treasury bonds. This is the U.S. government's "fiscal tug-of-war."

The ruling Democratic Party actually places great importance on the U.S. economic growth rate because Biden wants to be re-elected and gain votes. Therefore, the Biden administration hopes to use large-scale debt issuance and better fiscal stimulus policies to stabilize the U.S. economy and deliver satisfactory results.

Under such policy guidance, we found that in the second half of last year, the U.S. issued trillions of dollars in Treasury bonds and added an additional trillion dollars in extra debt, pushing the U.S. total debt to over 34 trillion.

So, why is the U.S. economy doing so well? It's actually because the Biden administration is developing through borrowing. During the last U.S. debt crisis, Biden obtained congressional authorization to temporarily "unlock" the "debt ceiling" crisis. Theoretically, the Treasury Department can issue debt without limits and without congressional restrictions.

However, the Democratic Party's approach has been thwarted by the Republican Party. The Republicans, holding some seats in Congress, have seriously challenged the Democratic Party's fiscal budget in Congress. They demand substantial cuts to any fiscal budget proposed by the Democratic Party, or else they will not pass it.

This has led to the U.S. Treasury having the right to issue debt without limits, but it does not have the right to "spend without limits." Nevertheless, the U.S. economy has still delivered a fairly good report card.

However, we need to reiterate: the Federal Reserve, the Treasury Department, the Department of Commerce, and other departments have previously made significant revisions to economic data on multiple occasions. The statistical data of the U.S. public sector is actually somewhat "distorted" and has been questioned by many experts and scholars.

Is this U.S. GDP data really that good? We still need to place a big question mark.Is the inflation crisis ongoing? Inflation in the United States is "fluctuating."

In response to the inflation issue in the United States, many economists believe that the U.S. economy has the potential to continue falling into stagflation.

The monetary policy meeting in January showed that the inflation crisis has fluctuated within the United States. The expectation of a rate cut in March was unfulfilled, the probability of a rate cut in May decreased, and the most recent rate cut event has been postponed to June, with a reduced probability of a rate cut.

The Federal Reserve postpones rate cuts

This is because the U.S. CPI index in January rose by 0.3% month-on-month, reaching the largest increase in the past six months, and the annual inflation rate of 3.1% is also far higher than the 2% target set by the Federal Reserve.

The latest data shows that the U.S. core PCE for the fourth quarter has also been revised up to 2.1%, and these data together can prove that the inflationary pressure within the United States still exists.

What's worse, the U.S. real estate crisis we mentioned earlier is still ongoing, with U.S. rents facing a significant increase. This is because the high interest rates set by the Federal Reserve have led to a lack of sufficient housing in the U.S. market. The construction of housing and its entry into the market takes a lot of time, which is not like the Federal Reserve, where simply printing money can quickly change market supply.

Looking at the data, U.S. housing inflation reached a peak of 8.32% last March, and although it has decreased recently, due to the Federal Reserve's continuous interest rate hikes and maintenance of the highest interest rates, the current 30-year mortgage rate is still as high as 8%.

Compared with China's home loan interest rate of less than 4%, and the U.S. home loan interest rate of up to 8%, this means that the U.S. real estate market is actually in a state of "being ignored."

Therefore, even Federal Reserve officials admit that the recent progress in inflation has been "a bit bumpy," especially with housing inflation events exceeding expectations.From this perspective, both economists and the Federal Reserve are deeply concerned about the recurrence of inflation, as the economic data are not very optimistic. This pessimistic sentiment directly leads to the rise in US Treasury yields, causing investors to "sell off US Treasuries."

At present, due to the continuous postponement of the Federal Reserve's interest rate cuts within the year, and the reduction of the cut from 100 basis points to 75 basis points, which is less than market expectations, it has turned the trade of buying US Treasuries from a sure-profit deal into an uncertain event.

Why did China increase its holdings of US Treasuries at the end of last year? Because at that time, the US economic data were relatively good, and inflation was under control, making it profitable to buy US Treasuries.

Why are we likely to sell off US Treasuries in the first half of 2024? Because buying US Treasuries has become "not cost-effective," and selling and reducing holdings of US Treasuries have become the common understanding and trend among investors and central banks worldwide. The continuously rising yields of US Treasuries have proven this point.

In summary, the famous American investment bank JPMorgan Chase also stated that the US economy is sliding into the abyss of stagflation, entering the stagflationary environment of the 1970s.

The high interest rates set by the Federal Reserve have caused production and consumption within the United States to continuously stagnate, with inflation persisting across various sectors. Geopolitical crises are also stimulating inflation in the United States, which has led to the rebound of US inflation from continuous reduction to the current state.

In my opinion, if the US government did not choose to stimulate the economy by issuing debt, the United States would have already fallen into a stagflation crisis. However, the huge fiscal deficit, massive government spending, and the deepening debt crisis all indicate that this development model is unsustainable.

Therefore, the economic growth of the United States is actually unsustainable. Although stagflation and recession have not yet arrived, all of this is based on the "continuously burning dollar."

So, when one day US Treasuries no longer continue to be over-issued, and the US government cannot find a buyer in the international market, the crisis and collapse of the United States will arrive.