Fed notes rise in pessimism about US economic activity

The Federal Reserve The US (Fed) confirmed this Wednesday that the general outlook for the country’s economic activity has become “somewhat more pessimistic”, amid reports of “growing uncertainty and greater downside risks.”

This is how he summarizes it in his Beige Bookwhere it points out that energy activity remained largely stable, while the balance on agricultural activity was mixed, since drought conditions decreased in some districts.

Finance and agricultural income, in turn, remained “a worry”.

He Beige Book is a publication by the US regulator that analyzes the current economic conditions of the 12 districts into which the Fed divides the United States, based on qualitative information collected by each reserve.

The agency noted that national economic activity continued to expand from early April to mid-May.

However, conditions varied across industries and districts: most districts reported slight or modest growth, while two saw no change.

In the first quarter, gross domestic product (GDP) grew 1.6%, a low figure, but solid compared to the resentful global economy.

The Fed He added that since his previous report, published in mid-April, prices have risen at a rate “moderate” and they are expected to continue doing so in the short term, which could indicate that rate cuts will be delayed.

The inflation rate in the United States fell one tenth in April, to 3.4%, after two months of consecutive increases, still far from the 2% target.

Meanwhile, underlying inflation, a key data that analyzes the Fed in their decision making, it fell two tenths year-on-year, to 3.6%, and in monthly terms it grew three tenths.

The president of the FedJerome Powell reiterated this month at an event in Brussels that it is “likely” that his institution maintains rates at their current level at its next meeting to be held on June 11 and 12, and insisted that these should remain high for longer than expected.

Rates are currently in the range of 5.25% to 5.5%, their highest level in 23 years. They have continued like this since July of last year, after the eleven increases they had experienced since March 2022.