The Federal Reserve released its Beige Book report on the nation’s economic health on Wednesday, indicating that the U.S. economy remained “generally weak” as regional banks across the nation reported contractions.
The survey found that the five districts represented by New York, St. Louis, Minneapolis, Richmond, and Chicago all experienced contractions in economic and business activity, while growth occurred in the five districts represented by Atlanta, Dallas, Kansas City, San Francisco and Boston, according to the Federal Reserve. Despite the fact that nine of twelve districts reported a slowdown in inflationary pressure, prices are expected to remain “highly elevated” at least through the end of the year, with necessities such as food, rent and utilities among the hardest hit.
“Most regional banks are observing their respective economies on the cusp, as the brief and anemic growth of the third quarter gives way to straight-up declines,” E.J. Antoni, research fellow for Regional Economics in the Center for Data Analysis at The Heritage Foundation, told the Daily Caller News Foundation. “About half the regions are already in contraction territory. There are already widespread declines in new orders [for businesses], a forward-looking indicator.”
In August, the Federal Reserve Banks of New York, Dallas, Philadelphia and Richmond each reported that new manufacturing orders were down, which Antoni warned is a sign of weakening economic conditions. These results are consistent with results from the Global Purchasing Managers’ Index (PMI), which found that the global economy was contracting as new orders declined, with the U.S. contracting at the fastest rate, according to a Tuesday report by S&P Global and J.P. Morgan Chase.
Even where contractions have not yet begun, growth is slowing noticeably, Antoni told the DCNF.
“As economic activity everywhere slows, the places that already had the slowest growth are just the first to get into contraction territory,” he said.
Businesspeople and other experts surveyed in Philadelphia, Chicago, Dallas and Boston all expressed concerns about a recession, according to the Federal Reserve. Nearly three quarters of private economists believe that the Federal Reserve will induce a recession if it is successful in reducing inflation within the next two years, according to an Aug. 22 report by the National Association for Business Economics.
Federal Reserve Chair Jerome Powell went on the record in an Aug. 26 speech that “some pain” for businesses and households was an acceptable consequence to the Fed in order to rein in inflation.
The Federal Reserve is expected to raise interest rates at its next meeting as part of ongoing efforts to combat inflation, but whether it will do so by 0.5% or 0.75% is not certain, according to Bloomberg.
The Board of Governors of the Federal Reserve did not immediately respond to a Daily Caller News Foundation request for comment.
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