5th September 2024 – (Washington) The latest Beige Book released by the U.S. Federal Reserve on Wednesday indicates a growing concern over economic performance, with more districts reporting “flat or declining” activity. The survey highlights that while economic activity grew slightly in three districts, the number of regions experiencing stagnation or contraction rose from five to nine compared to the previous report.
The Beige Book, which aggregates insights from the Fed’s 12 regional reserve banks, noted a downturn in consumer spending across most districts, a shift from the steady levels observed in prior periods. Employment levels remained generally stable; however, there were reports of firms limiting hiring, reducing hours, or decreasing staff through attrition.
Manufacturing activity continued to decline in the majority of districts, aligning with data from the Institute for Supply Management (ISM), which reported a contraction in U.S. manufacturing for the fifth consecutive month in August.
The report also reflected mixed results in residential construction and real estate, with most districts noting softer home sales. Commercial construction activity presented a similarly varied picture.
Looking ahead, while some contacts expect stability or slight improvements in economic activity over the coming months, others in three districts anticipate further declines.
Federal Reserve Chair Jerome Powell has indicated that the “time has come” for adjustments to monetary policy, suggesting a likely interest rate cut during the upcoming meeting on September 17-18. According to the Chicago Mercantile Exchange Group’s FedWatch Tool, the probability of a 25 basis point cut stands at 55%, while a 50 basis point reduction is seen at 45%, an increase from 38% earlier in the week.
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