The US recession has deepened, the US Federal Reserve said on Wednesday, as fresh data showed industrial output slumped to a decade low in March and annual inflation fell for the first time in 54 years.
“Overall economic activity contracted further or remained weak,” the Fed said in its Beige Book report, a survey of economic activity culled from the central bank’s 12 districts.
The report, based on information gathered from early last month until April 6, said five of the 12 districts surveyed noted a “moderation in the pace of decline” while several districts also “saw signs that activity in some sectors was stabilizing at a low level.”
The report did not provide figures on any additional economic contraction.
The latest government figures showed the economy contracted by 6.3 percent in the last quarter of last year, following a home-mortgage meltdown that triggered financial turmoil and slammed the brakes on economic growth.
The US plunged into recession in December 2007.
The government will announce its initial estimate of first-quarter GDP on April 29.
A survey of 53 economists released by the Wall Street Journal last week said GDP could contract in the first and second quarters of this year by 5 percent and 1.8 percent respectively.
A modest return to growth is not expected until the third quarter.
The Beige Book report, based on phone calls to businesses across the country, is used by the Federal Open Market Committee, the central bank’s policy-making body, in decision making. Its next meeting will be held on April 28 and April 29.
Policymakers last month voted to unanimously hold the Fed’s base interest rate at a historically low range of zero to 0.25 percent, where it has been since the middle of December and have suggested the rate would be kept there for quite some time.
Underscoring the depth of the US recession, government data showed on Wednesday that consumer prices last month posted their first annual drop in 54 years and industrial production fell to a decade low.
The Labor Department said the consumer price index (CPI) fell 0.1 percent last month on a seasonally adjusted basis from a month ago and declined 0.4 percent from a year ago, the first annual drop since August 1955.
Most analysts had expected a 0.1 percent month-on-month rise in March for the CPI, which tracks the average price of consumer goods and services purchased by households. It had risen 0.4 percent in February.
Core CPI, which excludes food and energy prices, increased 0.2 percent for the third month in a row in March. The core rate was up 1.8 percent from last March.
The annual inflation figure could continue to decline in the months ahead and “become significantly negative,” said Marie-Pierre Ripert, an economist with Natixis bank, adding that “the risk of deflation will not disappear rapidly.”
It could hit a negative 2.3 percent in July, as a result of a “large base effect” from oil prices that had reached record peaks above US$147 last year, she said.
Deflation is a price decline on a sustained basis that encourages consumers to delay purchases because they expect prices to continue falling.
The Fed said in a separate report on Wednesday that industrial production fell last month for the fifth consecutive month, by 1.5 percent, to the lowest level in a decade.
The seasonally adjusted monthly decline matched the 1.5 percent drop in February and was much steeper than the 0.9 percent decline expected by most analysts.
Output last month dropped to its lowest level since December 1998 and was a hefty 12.8 percent below its year-earlier level.
“The huge declines in industrial production in the past two quarters reflect very aggressive cuts in inventories by businesses,” said Nariman Behravesh, chief economist at IHS Global Insight.
“The potentially good news is that businesses are now close to getting their inventories under control,” Behravesh said.
MORE VISITORS: The Tourism Administration said that it is seeing positive prospects in its efforts to expand the tourism market in North America and Europe Taiwan has been ranked as the cheapest place in the world to travel to this year, based on a list recommended by NerdWallet. The San Francisco-based personal finance company said that Taiwan topped the list of 16 nations it chose for budget travelers because US tourists do not need visas and travelers can easily have a good meal for less than US$10. A bus ride in Taipei costs just under US$0.50, while subway rides start at US$0.60, the firm said, adding that public transportation in Taiwan is easy to navigate. The firm also called Taiwan a “food lover’s paradise,” citing inexpensive breakfast stalls
TRADE: A mandatory declaration of origin for manufactured goods bound for the US is to take effect on May 7 to block China from exploiting Taiwan’s trade channels All products manufactured in Taiwan and exported to the US must include a signed declaration of origin starting on May 7, the Bureau of Foreign Trade announced yesterday. US President Donald Trump on April 2 imposed a 32 percent tariff on imports from Taiwan, but one week later announced a 90-day pause on its implementation. However, a universal 10 percent tariff was immediately applied to most imports from around the world. On April 12, the Trump administration further exempted computers, smartphones and semiconductors from the new tariffs. In response, President William Lai’s (賴清德) administration has introduced a series of countermeasures to support affected
CROSS-STRAIT: The vast majority of Taiwanese support maintaining the ‘status quo,’ while concern is rising about Beijing’s influence operations More than eight out of 10 Taiwanese reject Beijing’s “one country, two systems” framework for cross-strait relations, according to a survey released by the Mainland Affairs Council (MAC) on Thursday. The MAC’s latest quarterly survey found that 84.4 percent of respondents opposed Beijing’s “one country, two systems” formula for handling cross-strait relations — a figure consistent with past polling. Over the past three years, opposition to the framework has remained high, ranging from a low of 83.6 percent in April 2023 to a peak of 89.6 percent in April last year. In the most recent poll, 82.5 percent also rejected China’s
PLUGGING HOLES: The amendments would bring the legislation in line with systems found in other countries such as Japan and the US, Legislator Chen Kuan-ting said Democratic Progressive Party (DPP) Legislator Chen Kuan-ting (陳冠廷) has proposed amending national security legislation amid a spate of espionage cases. Potential gaps in security vetting procedures for personnel with access to sensitive information prompted him to propose the amendments, which would introduce changes to Article 14 of the Classified National Security Information Protection Act (國家機密保護法), Chen said yesterday. The proposal, which aims to enhance interagency vetting procedures and reduce the risk of classified information leaks, would establish a comprehensive security clearance system in Taiwan, he said. The amendment would require character and loyalty checks for civil servants and intelligence personnel prior to
RSS