Economic activity in the United States has shown little change in recent weeks, according to the US Federal Reserve’s latest Beige Book report. However, the report indicated weakening employment conditions in approximately half of the Federal Reserve’s 12 districts, alongside a decrease in consumer spending. These factors are likely to amplify concerns regarding the labour market as the next interest rate decision approaches.
The Beige Book stated that most of the 12 Federal Reserve districts reported little change in economic activity since the previous report. Two districts noted a modest decline, while one reported modest growth. Employment figures showed a slight decline over the reporting period, with about half of the districts observing weaker labour demand.
The report also highlighted that despite an increase in layoff announcements, several districts reported that businesses were limiting headcount through hiring freezes, replacement-only hiring, and attrition, rather than resorting to layoffs. This suggests a cautious approach to workforce management amid economic uncertainty.
Kathy Bostjancic, chief economist for Nationwide, commented that the report paints a picture of a lethargic economy, which would support a potential interest rate cut in December. TD Securities echoed this sentiment, noting the recent volatility in market-based probabilities for a December rate cut, which have fluctuated significantly.
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