Fri, Oct 18, 2019 - Page 10 News List

US firms say near-term outlook dim as growth slows: Fed

AFP, WASHINGTON

Less than stellar US growth in recent weeks has caused many businesses to lower their outlooks and they now expect the economy to weaken, the US Federal Reserve said on Wednesday.

The Fed later this month is widely expected to cut interest rates for the third time this year as policymakers work to provide support for an economy that has begun to sag — even though for the moment it continues to outshine the rest of the industrialized world.

“The US economy expanded at a slight to modest pace ... as business activity varied across the country,” the central bank said in its beige book report on the economy.

“Business contacts mostly expect the economic expansion to continue; however many lowered their outlooks for growth in the coming six to 12 months,” it said.

Most economists do not expect a recession next year, but forecasting models still show the risk is increasing.

The hardships that manufacturing and agriculture face have not eased, the report said.

Elsewhere, the picture has been uneven, though household spending has remained “solid,” said the report, which gathers anecdotal accounts from across the nation.

The mood was generally better in the southern and western regions of the country, while the Midwest and Great Plains — regions key to US President Donald Trump’s election upset in 2016 — were gloomier, the Fed said.

Oxford Economics said in a client note that the report was “lackluster” and forecast more rate cuts from the central bank.

“We still expect two more rate cuts this year, in October and December,” the firm said.

While US economic expansion is in a record 11th year and unemployment remains at 50-year lows, Fed members at their most recent meeting said they had become “more concerned” by mounting risks.

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