US Fed sees economic activity slowdown in some districts
The US Federal Reserve has noticed a slowing down of economic activity in some districts, while some recorded modest growth in labor market. The consumer spending also took a hit in some areas owing to financial market crash.
The United States Federal Reserve has come out with its regular Beige Book (Fed Survey) on its 12 regions. According to central bank's 'Beige Book' on regional economic activity, half of the Fed's 12 districts recorded a moderate growth since January 2016. Previous report indicated similar growth in nine districts. Consumer spending was down in three districts as the latest financial turmoil has been affecting the spending capacity.
The Wall Street Journal (WSJ) reports that consumer spending contributes two-thirds to the gross domestic product (GDP) of the US. However, majority of its districts recorded growth in consumer spending. The US Federal Reserve believes that optimistic level of business contracts is giving new hopes about future economic growth.
The latest Beige Book is clearly indicating the steady growth of US economy. PNC economists said "Consumer spending, the housing market, and commercial construction continue to lead growth in early 2016. The latest report is further proof that the US economy is growing steadily and not falling into recession."
The New York Times further adds that economic activity expanded in most of the US during January and February of this year, Mainly home sales and consumer spending propelled the growth. However, key factors such as surging US dollar and weaker oil prices are hindering growth prospects in some sectors.
Jim Russell, a vice president and portfolio manager at Bahl & Gaynor Investment Counsel, said "We think the Beige Book is an accurate snapshot of where the US economy is right now. In a word, it's uneven." Among the different industrial verticals, manufacturing and energy segments were suffered due to weaker activity.
Richmond and San Francisco witnessed moderate growth, while marginal recovery was recorded in Cleveland, Atlanta, Chicago and Minneapolis. On the other side, Philadelphia posted marginal increase in economic activity, while it was mixed condition in St. Louis. Economic activities in New York and Dallas on the other hand, was flat while Kansas City suffered a modest drop in economic activity, as reported by CBS MoneyWatch.
The US Federal Reserve's next meeting is scheduled on 16-17th of March. Majority of economists predict that the interest rate may not be changed. Consumer inflation is steady, while wage rise is moving from flat level to stronger note. The US Federal Reserve is hoping for pay rise following the increase in employment numbers which was lagging since mid-2009 and has just started recovering.