Declining US economic growth rate will benefit gold and silver

The data released last week showed that the third quarter of the United StatesGDPMonth on month growth2.6%Compared to the second quarter-0.6%The growth rate has significantly improved. Although the market expects the United States in the third quarterGDPWill increase month on month2.4%However, the final announced result still exceeded market expectations. This also puts downward pressure on gold and silver.

U.S.AGDPHas the growth rate really improved? From the United StatesGDPAccording to the sub item data, the main source of US economic growth in the third quarter was net exports, which contributed to2.77%The growth rate of. In addition, the contribution rate of government expenditure has also shifted from negative to0.42%However, the personal consumption contribution rate has decreased to0.97%The contribution rate of private investment is-1.59%, dragging down the overall performance of the US economy. However, consumption and investment, as traditional drivers of US economic growth, did not perform well in the third quarter, raising doubts about the sustainability of US economic growth.

Figure 1.U.S.AGDPContribution rate

From the confidence data of American companies,10Month USAMarkitmanufacturingPMIAnd the service industryPMIShuangshuang fell below50The boom bust line indicates a weakening of confidence in the US economy among American companies, andGDPThe negative investment contribution rate of Chinese enterprises corresponds perfectly. This indicates that US companies are not optimistic about their expectations for the US economy, which has led to a cautious attitude towards investment spending and suppressed the sustained growth of the US economy.

Figure 2.U.S.AMarkitmanufacturingPMIAnd the service industryPMI

From the perspective of consumers, although the US consumer confidence index has slightly increased recently, it is still in a downward trend overall. And the Consumer Confidence Index released by the American Chamber of Commerce10Descending at the end of the month102.5. In the context of weak consumer confidence, the willingness to consume has decreased, and the year-on-year growth rate of personal consumption expenditure in the United States is gradually declining, verifying the impact of US consumption expenditure onGDPThe decrease in the contribution rate of growth further limits the growth of the US economy.

Figure 3.Consumer confidence index and personal consumption expenditure in the United States

Another sign that reflects the weakening of consumer confidence in the United States is that the US real estate market is beginning to cool. New home sales in the United States from2020In the second half of the year, it peaked and fell back. Since then, the transaction volume of new houses has continued to decline. Currently, the annualized sales volume of new houses has decreased60About ten thousand sets. The decrease in housing sales also caused the growth rate of US housing prices to peak and decline at the beginning of this year. In short, the decrease in housing sales and the decline in housing price growth are also manifestations of the weakening of consumer confidence in the United States, which is detrimental to the US economy.

Figure 4.New home sales in the United States andFHFAGrowth rate of housing price index

The weakening of US investment and consumer confidence will affect US investment and consumer spending, which will put pressure on the rise of US prices. Although,9Month USAPCEThe year-on-year growth rate of the price index remains at6.2%Level of expertise, corePCEThe year-on-year growth rate of the price index has increased to5.1%, demonstrating the resilience of inflation in the United States. However, the decrease in private sector investment and consumer spending in the United States will put inflationary pressure on the country. And, the United States10The change in monthly inflation expectations has decreased to5%This indicates that consumers expect the inflation level in the United States to decrease.

Figure 5.US inflation expectations andPCEPrice index growth rate

If the economic growth rate and inflation level decrease, it may affect the pace of the Federal Reserve's tightening. The Federal Reserve's significant interest rate hike is mainly due to the core of the United StatesCPIAnd the corePCEThe price index has risen. But a significant interest rate hike also brings greater pressure to US economic growth. There have been calls in the market recently for the Federal Reserve to take into account the US economy and slow down the pace of interest rate hikes.12The expectation of the Federal Reserve raising interest rates in the month has also decreased to a possible rate hike50A basis point, which will bring benefits to gold and silver.