The Recession of America's New Economy — The Paradox of Low Unemployment and Stagnant Wage Growth in the United States

Abstract

On September 18, the interest rate cut announced by the US Federal Reserve Board was the first interest rate cut since March 2020, and the industry generally analyzed that this will also open the curtain of the Fed's interest rate cut cycle. The Federal Reserve's practice of regulating monetary policy for its interests has improved the US economy. Still, the inhibitory effect of high interest rates on the economy is also emerging. The prolonged period of high interest rates has created a cost-of-living crisis for Americans, whose real standard of living is not as good as the economy looks. The pace of rate cuts is not expected to be as rapid as the pace of rate increases, which may have a contractionary effect on economic development in the United States and other economies. This article will start with the paradox between low unemployment and slow wage growth in the United States. The close relationship between inflation and wage levels is introduced. This analysis explores the factors contributing to the slow economic growth in the United States from various perspectives and offers predictions for the country's short- and long-term economic outlook. While domestic tensions are gradually easing in the short term, the long-term prospects for the U.S. economy appear less optimistic. This is due to enduring structural issues within the country, a significant decline in consumption levels, and external influences that continue to pose challenges to sustained growth.