The latest Federal Reserve Brown Book survey shows that there has been little change in US economic activity over the past month and a half, with labor market tensions continuing to ease and prices continuing to rise moderately. The report also shows that the outlook for the US economy is stable or slightly slowing.
The Federal Reserve releases its Beige Book 8 times a year, summarizing the results of 12 regional reserve banks' assessments of the US economic situation. This report is an important reference material for the Federal Reserve's monetary policy meeting and was released two weeks before the Federal Open Market Committee (FOMC) meeting.
The short-term economic outlook is generally described as stable or slightly slowing growth, "the Federal Reserve said in its Beige Book report on Wednesday." The tension in the national labor market continues to ease
The brown book was compiled by the St. Louis Federal Reserve and the data collection deadline is October 6th of this year. The brown book shows that since the release of the report in September, economic activity in most regions has remained almost unchanged.
The report states that due to differences in prices and product supply, consumer spending is mixed, particularly among general retailers and car dealerships.
Price increases are expected to slow down
The report states that overall, prices continue to rise at a moderate rate. The increase in sales prices is lower than the input price, as consumers become more sensitive to prices, making it difficult for businesses to pass on cost pressure to consumers.
Overall, companies expect prices to rise in the coming quarters, but the increase will be lower than in previous quarters, "the report said. Several regions have reported a decrease in the number of companies expected to experience significant price increases in the future
Although inflation in the United States has slowed down, it is still above the Federal Reserve's target. Measured by the Federal Reserve's preferred inflation indicator, PCE, excluding volatile food and energy, the core PCE still saw a year-on-year increase of nearly 4% in August.
The report also shows moderate growth in the labor market. The report states that "salary growth has been moderate in most jurisdictions, and multiple contacts have reported that companies have adjusted their salary plans to mitigate labor cost shocks, including replacing salary increases with remote work and lowering contract bonuses.
The Federal Reserve tends to remain stagnant again next month
Since March 2022, the Federal Reserve has raised interest rates by 525 basis points, a total of 11 times. Last month, the central bank stood still.
Federal Reserve officials have hinted that they are inclined to maintain policy interest rates unchanged for the second consecutive time next month after the recent rise in bond yields has led to a tightening of financial conditions. Due to the strong economic data, the yield of 10-year US treasury bond bonds jumped to the highest level since 2007 on Wednesday.
Federal Reserve Governor Christopher Waller is one of the hawkish officials who stated earlier on Wednesday that the Fed can wait and collect more data before deciding whether the economy needs further monetary restrictions.