Five of the Federal Reserve’s 12 regions reported flat or falling activity in the last two months, according to a survey released by the Fed on Wednesday. This suggests that the U.S. economy has been slowing down.
Three more weak districts were found than in the last survey, which was done in May.
According to the Fed’s Beige Book survey, people are becoming more frugal, which means that housing spending hasn’t changed much.
The Fed survey found that in almost every district, stores were discounting items or price-conscious customers were only buying necessities, settling for lower quality items, buying fewer items, or looking around for the best deals.
The Chicago Fed said that in its Seventh District, “foot traffic was up more than sales.” They also said that a contact in the grocery industry saw “more consumers (across all income groups) shopping at multiple stores, which he interpreted as a signal of greater price sensitivity.”
One surefire way to slow down inflation would be for people to pay more attention to prices.
The Fed said that prices and wages rose at a moderate rate overall.
This Beige Book, which is made up of stories from the Federal Reserve’s business contacts, covers the six weeks before July 8. It was made before the next meeting of the Fed, which is July 30 and 31.
Different districts reported very different patterns of manufacturing activity. One person who works with metal fabrication in Wisconsin said that he hadn’t seen conditions this weak in 43 years. A metal fabricator in the Pacific Northwest, on the other hand, said they had a lot of orders and raw materials.
Travel and tourism kept growing steadily and were up to par with what was expected before the season. A report said that vacation spots in Arkansas are great places to rent electric road bikes.
The poll did not think the next six months would be good, though. It was found that business contacts are expecting less activity because of a wall of worries, such as the uncertainty surrounding the upcoming presidential election, domestic policy, geopolitical conflict, and inflation.
Sal Guatieri, a senior economist at BMO Capital Markets, said, “The data shows that growth is slowing down, job markets are becoming less tight, and inflation is falling.”
Even though there’s no reason for the Fed to cut rates right away, Guatieri said that “the ground is slowly being groomed for a September rate cut.”
