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The American economy is not as strong as we all thought. Growth has slowed to stall speed over the last four months. It looks like a hardish landing after all.

Citigroup has become the first big American bank to warn that the US has already tipped into a recession. Once this process begins, it can snowball very fast into mass business layoffs unless the Federal Reserve moves fast.

An outcome of this severity would spread to Britain almost instantly through the world’s dollarised credit system and via contagion effects, leaving the new government facing an immediate economic crisis.

America’s economic slowdown has crept up on the world. Labour economists have been warning for months that the US jobs market is breaking down. The trouble always starts with millions of ‘marginally attached’ workers, mostly off the radar screen.

The Treasury has also been draining liquidity by rebuilding its cash balance at the Fed. Both effects are likely to turn “significantly contractionary” with the usual lag.

Americans have depleted their excess savings from the pandemic and are now depleting their credit lines as well. The St Louis Fed says the percentage with delinquent credit card debt has hit double digits and is approaching the peak seen at the end of the dotcom bubble.

It is sobering to think that the US economy is running out of steam even though the personal savings rate has fallen to historical lows of 3.8pc of GDP, four percentage points lower than the pre-Covid average.