US: No Recession Still in Sight, According to the Fed – Finance

Economic activity in the United States has remained stagnant in recent weeks, even picking up very slightly in December, but a recession may be averted, according to the Federal Reserve’s Beige Book published on Wednesday.

“Economic activity remains relatively unchanged from the previous report,” said the publication, based on surveys of twelve regions of the American central banking system. A six-week period until January 9. “Five regions reported moderate or modest gains in activity, six saw no change or a slight decline, and one reported a steeper decline,” the Fed said, adding that “communications generally expect modest growth for the coming months.” Although the current trend is similar to that reported in the previous report published on November 30, this positive note differs from the “more uncertainty or pessimism” reported in the survey six weeks ago.

Activity continues to be supported by “slightly increased” consumption, but not all sectors are equally buoyed, the survey noted, with “traders reporting solid holiday sales” and others “suggesting that high inflation continues to dampen purchasing” by consumers, particularly those with middle incomes. power”. On the employment front, growth continued at a “moderate to moderate pace,” but only one region reported a decline in employment. In general, labor shortages still prevail.

Hiring difficulties are also weighing on employers, who are reluctant to lay off workers even though demand is currently falling. Under these conditions, the pressure on wages “remains significant, even if the five regions emphasize the propensity to rest.” On the inflation side, “the pace of growth has slowed” in a number of regions, but traders nevertheless highlighted the “increasing difficulty in passing on costs to prices” for their products, suggesting “more price sensitivity” on the consumer side.

Although the rate of inflation has slowed sharply since mid-June, the level remained relatively high in December, at 6.5% based on the CPI price index, and the Fed has already announced that further rate hikes will be needed at future meetings to bring inflation down. It has come close to its 2% target.

“Economic activity remains relatively unchanged from the previous report,” said the publication, based on surveys of twelve regions of the American central banking system. A six-week period until January 9. “Five regions reported moderate or modest gains in activity, six saw no change or a slight decline, and one reported a steeper decline,” the Fed said, adding that “communications generally expect modest growth for the coming months.” Although the current trend is similar to that reported in the previous report published on November 30, this positive note differs from the feeling of “more uncertainty or pessimism” reported in the survey six weeks ago. Activity continues to be supported by “slightly increasing”. Emphasizing that “consumption is not watering down all sectors equally,” the survey noted that while “retailers reported solid sales over the holidays,” others pointed out that high inflation continues to reduce the purchasing power of consumers in particular. modest incomes. On the employment front, growth continued at a “moderate to moderate pace,” but only one region reported a decline in employment. Overall, labor shortages still prevail. Hiring challenges are also making employers hesitant, reluctant to lay off workers even though demand has slowed for the time being. Under these conditions, the pressure on wages “remains significant, even if the five regions emphasize the propensity to rest.” On the inflation side, “the pace of growth slowed” in several regions, but traders nevertheless highlighted the “increasing difficulty in passing on costs” of their products, with “more price sensitivity” on the consumer side. The rate of inflation has slowed sharply since mid-June, the level remained relatively high in December at 6.5% of the CPI price index, and the Fed has already announced further increases in inflation. Rates will be needed in future meetings to bring inflation back. Close to the 2% target.

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