The US may build the greatest economic bubble in history

By Hu Weijia Source:Global Times Published: 2019/10/16 21:44:36


Trump Photo:Xinhua

US President Donald Trump tweeted Wednesday that "We now have the greatest Economy in history!" But a key issue is whether the US is going to face the biggest economic bubble in history.

No one can preside over "the greatest economy in history" while fighting a trade war and imposing tough economic sanctions on its trading partners. The economy is currently enjoying low unemployment and low inflation, but the US needs to address the potential risk of an economic bubble. An overly optimistic comment that the US economy is doing the best it ever has may be designed to inspire confidence in the market, but it only helps bubbles accumulate.

Some media reports said executives in the US are dumping stock in their companies at the fastest pace in two decades. Stock sales by corporate insiders reached $19 billion from January 1 to mid-September, the Financial Times reported, citing data from Smart Insider, a UK-based group. Some statistics showed stock buybacks are roaring. Some executives pursue share buybacks to pump up stock prices so they can sell their own holdings.

A bubble is building in the US stock market, which is always an important indicator for the US economy. The performance of the US equity market is usually considered to reflect on how well US-listed companies are doing. Executives usually sell their shares because they lack confidence in their companies. It is a negative signal for the US economy.

Economic uncertainty has caused more people to get out of the stock market, increasing the possibility of a crash. It could have a chain effect and a negative impact on consumption, if it results in decreasing personal wealth and income. The US economy is in a good place at the moment with an outlook for moderate growth, but the potential threat to economic stability is increasing.

This isn't the time to be arrogant and overly optimistic. However, the US is moving in the wrong direction when it exaggerates the positive factors in its economy.

If the US has the greatest economy in history, why is the Federal Reserve cutting interest rates? This stimulus policy is driving the bubble in the US economy. The US economy will have to pay for inspiring words such as the "greatest economy," sooner or later. We hope US policy can help its economy avoid its greatest bubble in history.

The author is a reporter with the Global Times.
Newspaper headline: The US may build the greatest bubble in history


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