“Beige Book” published: US central bankers register moderate growth

“Beige Book” published
US central bankers register moderate growth

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It’s slightly uphill again. After collecting data from the 12 regional central banks in the US, the Fed notes that the country’s economy is growing moderately and inflation is mostly slowing. In a few weeks, the central bankers will announce what conclusions they will draw from this.

According to the Federal Reserve, the US economy has recently grown moderately. Economic activity picked up slightly in July and August, the Fed said in its Beige Book economic report. The survey ran until August 28 and was based on business contacts from the regions. However, growth in the labor market was modest across the country. In some Fed districts, consumers have run down their savings and even gone into debt.

Inflation has slowed overall in most regions, particularly in manufacturing and consumer goods. Consumer spending in the tourism sector was highlighted. These were stronger than expected, which was due to the continued pent-up demand from the corona pandemic. Other consumer spending continued to develop moderately.

Respondents in almost all districts indicated that companies expect wage growth to slow down in the near future. In addition, the majority of districts reported that overall price growth had weakened. The central bank wants to curb the strong inflation and has raised interest rates sharply since the beginning of 2022 – to the current range of 5.25 to 5.50 percent. Fed Chair Jerome Powell left the door open to another hike, but was uncommitted.

Fed director believes in soft landing

The US monetary authorities want to curb inflation and slow down economic growth, but without stalling the economy. In the economist’s jargon, this scenario is called a soft landing. In spring, the US economy grew by 2.1 percent on an annualized basis. The growth in gross domestic product was therefore slightly stronger than at the beginning of the year when it was 2.0 percent.

Fed Director Christopher Waller recently said that it looked as if a soft landing would succeed. On the futures markets, the chances of an interest rate hike at the meeting on September 20 are considered to be very low. However, several currency watchdogs have recently left open the possibility that the Fed could do more towards the end of the year.

The US Federal Reserve prepares the next meeting with the so-called Beige Book. It is a summary of comments from the twelve US regional central banks reporting on the current economic situation in their respective regions.

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