The US has just released GDP data for the second quarter. The annualized growth rate of actual GDP was -32.9% month-on-month, slightly better than market expectations of -34.5%. Compared with -5% in the first quarter, it was further deteriorated from -5% in the first quarter, making it the biggest quarterly economic decline since World War II. The US dollar weakened slightly after the data was released. Specifically, the situation of each sub-item is as follows:

Private consumption of -34.6% month-on-month (annualized, same below) was the main drag. 1) Product consumption -16.7% month-on-month. Among them, consumption of durable goods was -5.8% month-on-month, and the decline was narrower than -14.0% in the first quarter. The +31.1% month-on-month increase in fitness equipment was an important contribution. Non-durable goods -21.6% month-on-month, +6.6% in the previous quarter; 2) Services -43.4% month-on-month, the decline was far greater than commodity consumption. Our anticipated blockade was against those that relied on person-to-person contactService industryIt is consistent with the judgment that the impact is greater. Among these, housing, utilities and electricity costs were +6.9% month-on-month.financeInsurance -5.5%, medical care -61.6% month-on-month, catering and lodging -81.4% month-on-month, delivery -85% month-on-month, entertainment -93.3% month-on-month.

Private fixed asset investment -29.3% month-on-month. Among them, residential real estate investment was -38.7% month-on-month, and corporate investment was -27% month-on-month. In corporate investment, construction (plants, oil wells, etc.) was -34.9% month-on-month, equipment investment was -37.7% month-on-month, and R&D investment -7.2%. In view of the rapid rebound in real estate demand after interest rates declined sharply, we expect real estate investment in private investment to rebound first in the third quarter, while investment in equipment, etc. will pick up relatively slowly.

The “recessionary” improvement in net exports continues. Global trade shrank significantly in the second quarter due to the intensification of public health events. On the US side, actual exports in the second quarter fell 64.1% month-on-month, while imports fell 53.4%. However,Because of its larger imports, the overall effect was that the US trade deficit narrowed, so net exports contributed +0.7 percentage points to economic growth. However, we also continue to emphasize that the positive contribution of net exports during this period of demand collapse is a typical “recessionary” improvement, which is not a good thing.

The GDP deflator index was -1.8% month-on-month and 0.6% year-on-year, indicating that the price index was under pressure amid a sharp decline in demand.

The data for the 2nd quarter is already in the pastThe gradual economic recovery in the third quarter is still a major trend. Overall, the month of April, when pressure on the US economy was greatest, is over, while the May and June data have rebounded markedly. Entering the third quarter, although the pace of economic recovery from July to August was “slow” compared to May-June due to the rebound in public health events (“The rebound in public health events may “slow down” the pace of US economic recovery”), we expect the overall trend to continue to recover.As a result, we expect the US GDP to return to positive month-on-month growth in the 3rd to 4th quarter.

The Fed's policy stance is expected to continue to be relaxed. At the latest FOMC interest rate meeting in July, the Federal Reserve stated that the US economy and inflation continue to face significant downside risks. As a result, we expect its policy stance to remain relaxed in the second half of the year, including continuing QE purchases of $120 billion per month, and the possibility of announcing the adoption of an “average inflation target” at the September meeting“Standard system”. The November meeting may revise the forward-looking guidelines (“Fed's July Interest Rate Meeting: Calm, but More Easing Is on the Way”).

Chart: The real GDP growth rate of the US in the second quarter was -32.9% month-on-month, slightly better than market expectations of -34.5%