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demand slows amid fears of recession (Beige Book)

demand slows amid fears of recession (Beige Book)

Washington (awp/afp) – Businesses in the United States are seeing “increasing signs of slowing demand” as concerns grow over the risk of a recession in the country, according to the Fed’s Beige Book published on Wednesday .

“Most districts reported a moderation in consumer spending” due to ever-higher food and energy prices eating into household incomes, the U.S. Reserve Bank said in its survey conducted between mid-May and mid-July with companies.

Thus, “significant price increases have been reported in all districts, at all stages of consumption”, she explains.

The release of its Beige Book coincides with the Labor Department’s release of the Consumer Price Index (CPI), which showed on Wednesday that inflation continued to climb in June, hitting 9.1% year on year. against 8.6% in May.

This new strong rise in prices should encourage the Fed to continue the rise in interest rates initiated since March to curb demand and calm inflation. It raised them again by three-quarters of a percentage point in June, its biggest increase since 1994.

Faced with the prospect of slowing demand, five of the Fed’s 12 districts noted concerns among businesses “of a growing risk of recession.”

“Like the previous report, the outlook for economic growth was mainly negative within the districts,” says the Beige Book. The companies surveyed thus expect “a further weakening of demand over the next six to 12 months”.

On the wage side, companies continue to record increases in the majority of districts. Most have indeed reported recent above-average wage increases while others are “planning to implement large near-term increases,” according to the Fed.

While labor market conditions remain tight for businesses, “almost all districts noted modest improvements in labor availability amid weaker demand for workers,” particularly among manufacturing and construction businesses. building questioned.

However, manufacturing activity remains “mixed”, with many districts reporting that “supply chain disruptions and labor shortages continue to hamper production.”

Due to persistently low inventory levels, the automotive sector continued to experience a “stagnant” level of new vehicle sales.

Hotel and tourism companies said leisure travel activity was “solid”, also noting an increase in business and group travel.

afp/rp

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