(Washington) The American economy has recently shown signs of slowing, according to a report published Wednesday by the American central bank (Fed), measures intended to slow inflation weighing on activity, less than five months before the presidential election.
“Economic activity has maintained a slight to modest growth rate in the majority of districts,” details the Beige Book. This survey carried out among businesses and economic players covers June and early July.
But of the 12 regions that the Fed covers, “five noted stable or declining activity, three more” than in the previous report, published at the end of May.
On the employment front, too, the situation is changing. The labor shortage that began in 2021, during the post-COVID-19 economic recovery, seems to be easing.
“Overall, employment grew slightly,” the Fed said, but “several districts reported declines in manufacturing employment as new orders slowed.”
The U.S. unemployment rate in June was 4.1 percent, still among the lowest in 50 years.
The employment situation is now being closely monitored to ensure that unemployment does not rise too much as a result of measures aimed at slowing inflation.
“Right now, I see the risk of rising unemployment as higher than it has been in a long time,” Fed Governor Christopher Waller said Wednesday morning.
Because the Fed, in order to combat the sharp rise in prices, has for a year maintained its rates – which dictate the rates of credits granted by banks to individuals and businesses – at their highest level since 2001, in the range of 5.25 to 5.50%.
It plans to start lowering them in the coming months, but wants to be sure that inflation falls sustainably.
The Fed’s next meeting will be on July 30-31, but market participants are pricing in a first rate cut at the following meeting, on September 17-18, according to CME Group’s assessment.
After a rebound this winter, inflation has resumed its downward trajectory, falling in June to 3% over a year, according to the CPI index.
The Fed is favoring another measure, the PCE index, which it wants to bring down to 2%. Data for June will be released at the end of the month, but it had fallen to 2.6% in May.