The US economy is expanding modestly, but job prospects are dim, the Federal Reserve said on Wednesday in a report seen as unlikely to change anticipation of a new stimulus.
In the Beige Book report on current economic conditions, the central bank painted, if not an upbeat picture of the economy, one better than the previous assessment that had warned the recovery was slowing.
“Reports from the 12 Federal Reserve Districts suggest that, on balance, national economic activity continued to rise, albeit at a modest pace, during the reporting period from September to early October,” it said.
The Beige Book is compiled from anecdotal information nationwide and published eight times a year. The latest report will be used as a reference by Fed policymakers at their Nov. 2 and Nov. 3 meeting.
Expectations are high that the Federal Open Market Committee (FOMC), headed by Federal Reserve Chairman Ben Bernanke, will restart major asset purchases, or quantitative easing, next month to boost growth.
At the Sept. 21 FOMC meeting, the Fed said it would continue to hold its main interest rate at virtually zero “for an extended period,” but the central bank warned it anticipated the need for additional stimulus after the previous Beige Book had reported “widespread signs of deceleration.”
Bernanke made his case for another bout of major asset purchases, dubbed “QE2,” to boost growth just days ago.
The latest Beige Book provided a glum picture of the world’s largest economy as it struggles to recover more than a year after the end of the worst recession since the Great Depression.
Consumer spending, which represents about 70 percent of US economic activity, was essentially stalled as retailers geared up for the year-end holiday season.
Retail spending was flat to moderately positive in most districts, the report said.
“Retailers said consumers are slowly regaining confidence, but remain price-conscious and were largely limiting purchases to necessities and non-discretionary items,” the report said.
Consumers had little extra in their pockets to spend as most districts reported little evidence of wage increases.
With unemployment stuck near 10 percent in recent months, the central bank offered scant hope on the jobs front.
“Hiring remained limited, with many firms reluctant to add to permanent payrolls given economic softness,” the report said.
Firms were also bracing for increased costs of employee benefits as a result of healthcare reform.
Inflation remained weak, with retail prices stable, although there was a slight buildup of input costs.
Consumer lending activity also was weak and demand for commercial and industrial loans remained feeble as businesses “continued to postpone capital spending plans because of economic and public policy uncertainties.”
Manufacturing, the sector that is leading the recovery, continued to show expanding activity, but the housing market, which collapsed three years ago amid a price bubble, was still weak, with most districts reporting sales below year-ago levels.
“Bottom line is that the Beige Book reported a modest improvement in economic activity in the recent period, but an apparent deterioration in the overall labor market situation,” Brian Bethune of IHS Global Insight said.
Bethune predicted the Fed was still on track to launch QE2 at next month’s meeting.
Jon Ogg, an analyst at 24/7WallSt.com, questioned the need.
“The newest Beige Book from the Federal Reserve might make you wonder why on Earth quantitative easing is necessary,” Ogg said. “Low growth is still OK, but the jobs issue is still front and center. Will quantitative easing and lower and lower rates force hiring?”
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
MAJOR DROP: CEO Tim Cook, who is visiting Hanoi, pledged the firm was committed to Vietnam after its smartphone shipments declined 9.6% annually in the first quarter Apple Inc yesterday said it would increase spending on suppliers in Vietnam, a key production hub, as CEO Tim Cook arrived in the country for a two-day visit. The iPhone maker announced the news in a statement on its Web site, but gave no details of how much it would spend or where the money would go. Cook is expected to meet programmers, content creators and students during his visit, online newspaper VnExpress reported. The visit comes as US President Joe Biden’s administration seeks to ramp up Vietnam’s role in the global tech supply chain to reduce the US’ dependence on China. Images on
New apartments in Taiwan’s major cities are getting smaller, while old apartments are increasingly occupied by older people, many of whom live alone, government data showed. The phenomenon has to do with sharpening unaffordable property prices and an aging population, property brokers said. Apartments with one bedroom that are two years old or older have gained a noticeable presence in the nation’s six special municipalities as well as Hsinchu county and city in the past five years, Evertrust Rehouse Co (永慶房產集團) found, citing data from the government’s real-price transaction platform. In Taipei, apartments with one bedroom accounted for 19 percent of deals last
US CONSCULTANT: The US Department of Commerce’s Ursula Burns is a rarely seen US government consultant to be put forward to sit on the board, nominated as an independent director Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest contract chipmaker, yesterday nominated 10 candidates for its new board of directors, including Ursula Burns from the US Department of Commerce. It is rare that TSMC has nominated a US government consultant to sit on its board. Burns was nominated as one of seven independent directors. She is vice chair of the department’s Advisory Council on Supply Chain Competitiveness. Burns is to stand for election at TSMC’s annual shareholders’ meeting on June 4 along with the rest of the candidates. TSMC chairman Mark Liu (劉德音) was not on the list after in December last