U.S. media: U.S. consumer spending during the shopping season is substantial, but economic worries remain

U.S. media: U.S. consumer spending during the shopping season is substantial, but economic worries remain Video: U.S. Thanksgiving Day and "Black Friday" online sales...

Video: U.S. Thanksgiving Day and "Black Friday" online sales hit record highs Source: Shanghai Oriental HD

The excerpt of the article is as follows:

"National Today", which tracks holiday business opportunities around the world, pointed out that due to the good economic performance of the United States, this year's "Black Friday" is expected to have the largest sales volume in history. The National Retail Federation also noted that the average American will spend $967 between now and December. This would be the highest number since the survey began 15 years ago.

In the U.S. economy, consumption accounts for about 70% and is the largest component of GDP. Therefore, consumption growth is particularly important to the overall economic growth of the United States. Since the third quarter of last year, U.S. GDP has bottomed out and rebounded, and the recovery momentum has picked up, but consumption growth has not improved significantly. If this shopping season can drive consumption growth, it will give a shot in the arm to the U.S. economy.

Trump posted on social media on Thanksgiving Day, boasting about the return of American jobs, the highest stock bull market in history, and the lowest unemployment rate in 17 years. Of course, Trump takes all the credit in his own account.

Optimism about the economy is indeed spreading. Judging from the barometer of the stock market, U.S. stocks hit record highs before the Thanksgiving holiday. Goldman Sachs previously predicted that there is a 60% chance that U.S. stocks will fall into a bear market in the next 12 months. However, it suddenly changed its stance recently and issued a report saying that the bull market in U.S. stocks will last at least three years. In other words, the bull market will continue throughout Trump’s term.

Overall, the global economy is experiencing the strongest synchronized recovery since the financial crisis. The main reason is the acceleration of capital expenditure growth in the corporate sector of the G3 economies (i.e. the United States, the European Union and Japan). Deleveraging has been basically completed, digesting the negative impact of quantitative easing, which will strongly support sustainable corporate earnings and productivity growth.

Of course, behind the rose color, there are still hidden worries about the US economy. The biggest uncertainty is the prospect of Trump’s tax reform. It is a recognized fact that U.S. taxes are too high. The U.S. corporate tax rate of 35% is the highest among developed countries. This had two major negative consequences. The first is to suppress the investment willingness of American companies; the second is to cause the funds of American companies to flow overseas.

Trump’s tax reform has three basic goals, namely reducing corporate tax to 20%, significantly reducing taxes for the middle class and simplifying the tax system. Cut taxes by approximately $1.5 trillion over the next decade. Overall, tax reform is a boon to businesses. Goldman Sachs predicts that if the tax reform bill is passed, S&P earnings per share will increase by 5 percentage points in 2018. However, if the tax reform bill is not passed, the S&P is expected to fall by 5% in the near future to 2,450 points.

Currently, the House of Representatives has passed the Tax Cuts and Jobs Act on November 16, and the Senate Finance Committee has also voted to pass the tax reform bill proposed by Republican senators. Trump hopes the tax reform bill will be this year's Christmas gift to the American people. But there are still many obstacles and variables.

Furthermore, although the overall economy is optimistic, the structural problems accumulated in the U.S. economy over the years have not yet been alleviated. For example, the gap between rich and poor, and the related shrinkage of the middle class. At the same time, about 19% of the bottom families in the United States are in financial difficulties. Their families have zero or even negative assets, and most of them are minority families; for example, 30% of African-American families and 27% of Latino families have no wealth or debt.

"The anger of the middle class" is an important reason why Trump came to power. If the U.S. economy only improves overall, but the results do not fall on ordinary people, especially the middle class, then such growth will not make much sense. This is also the reason why people must stay awake during the optimistic shopping season.