US Recession Risks Grow as Consumers Push Back Amid Rampant Inflation
2022.07.13 21:36
Budrigannews.com – Growing signs of a slowdown in economic activity stoked worries about a recession on the horizon as “substantial” inflation continues to put the squeeze on U.S. consumers, according to the Fed’s Beige Book released Wednesday.
The central bank’s Beige Book economic report, based on anecdotal information collected by the Fed’s 12 reserve banks through July 13, showed that while economic activity “expanded at a modest pace, on balance, since mid-May,” several districts flagged signs of slowing demand, and “contacts in five Districts noted concerns over an increased risk of a recession.”
The fresh signs of slowing demand comes as inflation continues to run hot unabated, with “substantial price increases” reported across all Districts, according to the report. There were some positive signs that inflation could moderate, in particular for construction inputs such as lumber and steel, which saw a moderation in prices in three-quarters of districts.
The U.S. consumer, however, which accounts for about two-thirds of economic growth, had moderated spending as “higher food and gas prices diminished households’ discretionary income,” most districts reported, according to the report.
The Fed’s Beige Book comes just as bets on the Fed delivering a 1% rate hike later this month has gathered pace following data showing inflation hit fresh 40-year highs.
