Qatar National Bank: The US economy has proven to be more resilient than expected

The Qatar National Bank report confirmed that the US economy proved to be more resilient than expected, indicating that the average economic data releases consistently provided positive surprises in the current year, which led to an improvement in growth expectations in the United States. Qatar National Bank expected in its weekly report that the US economy will grow by 1.1% this year, and while this figure is not considered strong, it remains far from levels that indicate a recession, and this proves the resilience of the US economy, which makes it in a better position to withstand any Possible new shocks, and this is especially important in the context of the possibility of pressures in the banking sector affecting expectations during the next few quarters. The report said that since late last year, growth expectations have improved, after it reached the minimum of 0.30%, growth expectations gradually rose to 1.05% in April 2023, and this improvement was not driven by any specific event that changed future expectations, but rather was driven by the issuance of activity data. Which was stronger than expected, which is evidence that the foundations of the economy are still solid. The report pointed out that this process was well monitored through the Citigroup Economic Surprising Index (CESI), which is a popular and useful tool for understanding and summarizing how economic data releases exceeded or lagged behind expectations over a specific period of time. The index for the United States includes 38 statistical measures. It includes a variety of major economic areas, including: the labor market, real estate, industrial production, the consumption sector, and business surveys. The index is considered weighted, as each of its weights depends on the extent to which the selected measure affects the financial markets. The report indicated that measures with high weights affect the financial market more than measures with low weights, and the index also takes into account the timing of information, as data dating back to the last 90 days have less weight than recent news and information, and values ​​above zero indicate the accumulation of positive surprises, while Negative values ​​indicate that the data releases were worse than expected. The index shows that the positive surprises were not isolated events. The index started an upward trajectory in January of this year, entered the positive zone at the beginning of February, and then rose to a new peak in March. The services sector, which represents 77% of the economy, was a major source of surprises. Positive, business surveys have exceeded expectations in the past few months, indicating that the economy remains resilient. The report attributed the relative economic resilience of the United States to three factors, which are explained, according to what the data indicates, which came stronger than expected. Consumption. In total, households have $18.2 trillion in deposits. Interestingly, even households in the bottom 60% of the income distribution benefit from high cash levels, with between $3,000 and $12,000 in excess savings. The second factor was the significant decrease in energy prices from the average levels recorded last year, which provided additional space in terms of disposable income. Energy consumption expenditures represent approximately 5% of the disposable income of average families, and reach 7% for low-income families. WTI prices peaked at a monthly average of $114.6 per barrel in June last year, before stabilizing at around $80 per barrel during the winter months. As for the third factor, it related to the strength of labor markets, despite some isolated layoffs in large American technology companies, and new job opportunities continue to be generated at a pace that exceeds the rate of population growth, and importantly, non-farm payrolls, a key measure of total employment, added 504 And 311 thousand jobs in January and February, respectively, compared to the monthly average that prevailed before the outbreak of the pandemic, amounting to 177 thousand jobs during 2018-2019, and the unemployment rate is at historically low levels, at 3.5%, and the stability of labor markets and the abundance of employment opportunities leads to Reduce household uncertainty, and provides another pillar to maintain higher levels of consumption.

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