The US Federal Reserve sees only modest growth in the US economy, with the long-depressed housing market as one of the few bright spots on the horizon, a report showed on Wednesday.
“Overall economic activity continued to expand at a modest to moderate pace in June and early July,” according to the Fed’s Beige Book report, which will frame the central bank’s policy meeting later this month.
With employment levels improving at only a “tepid pace,” the manufacturing sector expanding “slowly” and retail sales increasing “slightly,” there is little to no cheer in the regular report.
Photo: AFP
However, one bright spot was the housing market, which was at the epicenter of the financial crisis that plunged the world’s largest economy into recession.
After years that have seen low numbers of home sales, despite low borrowing rates and low prices, the Fed reported the first signs that the market may have hit bottom.
“Housing market reports were largely positive,” the Fed said. “Sales and construction levels increased and home inventories declined.”
The central bank pointed out that “demand for loans, particularly those related to real estate, grew modestly in most [Fed] districts.”
Earlier on Wednesday, official data showed that construction of homes in the US rose sharply last month from May to the strongest pace in almost four years.
Yet the broader picture is far from rosy.
Many investors are looking for the Fed to step in and announce further stimulus when it meets on July 31 and Aug.1 .
They worry that the US economy has reached stall speed, while Europe’s economic crisis, China’s slowdown and US politicians’ inability to tackle the country’s debt could prompt a fresh recession.
“Since the last Beige Book report early last month, economic activity has softened,” Paul Edelstein of IHS Global Insight said. “As a result, the Fed is likely to ease again later this year.”
In two days of US Congressional testimony this week, Federal Reserve Chairman Ben Bernanke pointed to a gloomy outlook for the US economy, warning further drops in unemployment would likely prove “frustratingly slow.”
With unemployment stuck above 8 percent — where it has been for more than three years — Bernanke expressed the Fed’s willingness to act if necessary, but gave no hints about concrete action.
BUSINESS UPDATE: The iPhone assembler said operations outlook is expected to show quarter-on-quarter and year-on-year growth for the second quarter Hon Hai Precision Industry Co (鴻海精密) yesterday reported strong growth in sales last month, potentially raising expectations for iPhone sales while artificial intelligence (AI)-related business booms. The company, which assembles the majority of Apple Inc’s smartphones, reported a 19.03 percent rise in monthly sales to NT$510.9 billion (US$15.78 billion), from NT$429.22 billion in the same period last year. On a monthly basis, sales rose 14.16 percent, it said. The company in a statement said that last month’s revenue was a record-breaking April performance. Hon Hai, known also as Foxconn Technology Group (富士康科技集團), assembles most iPhones, but the company is diversifying its business to
Apple Inc has been developing a homegrown chip to run artificial intelligence (AI) tools in data centers, although it is unclear if the semiconductor would ever be deployed, the Wall Street Journal reported on Monday. The effort would build on Apple’s previous efforts to make in-house chips, which run in its iPhones, Macs and other devices, according to the Journal, which cited unidentified people familiar with the matter. The server project is code-named ACDC (Apple Chips in Data Center) within the company, aiming to utilize Apple’s expertise in chip design for the company’s server infrastructure, the newspaper said. While this initiative has been
GlobalWafers Co (環球晶圓), the world’s No. 3 silicon wafer supplier, yesterday said that revenue would rise moderately in the second half of this year, driven primarily by robust demand for advanced wafers used in high-bandwidth memory (HBM) chips, a key component of artificial intelligence (AI) technology. “The first quarter is the lowest point of this cycle. The second half will be better than the first for the whole semiconductor industry and for GlobalWafers,” chairwoman Doris Hsu (徐秀蘭) said during an online investors’ conference. “HBM would definitely be the key growth driver in the second half,” Hsu said. “That is our big hope
The consumer price index (CPI) last month eased to 1.95 percent, below the central bank’s 2 percent target, as food and entertainment cost increases decelerated, helped by stable egg prices, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. The slowdown bucked predictions by policymakers and academics that inflationary pressures would build up following double-digit electricity rate hikes on April 1. “The latest CPI data came after the cost of eating out and rent grew moderately amid mixed international raw material prices,” DGBAS official Tsao Chih-hung (曹志弘) told a news conference in Taipei. The central bank in March raised interest rates by