원문 보기
Everyone is talking about AI right now, and rightly so , as it is a driving force not only for markets but also for the economy as a whole. Capital spending on AI is about 3% of GDP compared to US consumption, which is almost 70%, but this spending provided about half of the growth in the first and second quarters.
So, if you subtract capital spending on AI from real GDP, US economic growth was about 1.5%. So I think that's what we should focus on, and that's what I'm looking at right now. So, if capital spending slows next year, we should expect economic growth to slow. Aggressively raising Fed rates in a situation where real wages are negative and oil prices are high, which is hitting consumers, would be a mistake, so I think it was the right decision for the Fed to hold off today.
Catherine, I want to address what you wrote about in your recent note. You noted that three events are expected on the macroeconomic horizon over the next few weeks . The Fed meeting that took place today, where they left rates unchanged. The third quarter production report we will receive tomorrow.
And the Ministry of Finance's announcement regarding refinancing on November 4. You write that all these events point in the same direction. The economy is overheated. The central bank is the only institution in Washington that is willing to do something about this. And the market has already understood this .
Did today's news from the Fed confirm your thoughts on this? Is this the direction you wanted them to go in while maintaining the bet? Yes, I think this is the right move. It is not worth raising rates in a slowing economy. I probably disagree with Kevin Warsh that raising rates will affect AI funding.
I don't think they're too concerned about the level of federal funds. Therefore, an overly aggressive hike is unlikely to impact two key drivers of inflation: AI capital spending and oil prices. Supply shocks are not affected by the Federal Reserve and monetary policy. So the aggressive hike...I know the market or some analysts think we're in for four more hikes, three or four in 2027.
Not only do I think this is wrong, but I am convinced that it would be a mistake. We've already seen how the 10-year Treasury bond has behaved over the past month, in my estimation, this is a three-sigma event, meaning a deviation from the moving average of three standard deviations. This largely does the job for the Fed in the segment of the economy it can influence, namely the US consumer sector.
And the American consumer is already suffering. So what we definitely don't want to see—and I'll be blunt—is a slowdown in AI capital spending, an aggressive Fed rate hike, and another negative shock to consumers, which would create a double whammy: AI investments yielding less than they did this year, and consumers unable to compensate for that decline.
I think the Fed wants to avoid that, and the 10- year bond has largely done the job for them. So they really didn't need to raise the stakes today.
Comments 0