In the early hours of Thursday Beijing time, the Federal Reserve released the latest edition of the "Summary of Commentary on Current Economic Conditions" (also known as the "Beige Book"), stating that overall economic activity has not changed much from the last survey, with most regions showing signs of weak growth. Analysts believe this provides a reason for the Federal Reserve to further lower interest rates.
The Beige Book is an overview of the U.S. economic situation by the Federal Reserve, compiled from surveys of the current economic conditions by 12 regional Federal Reserve Banks, released eight times a year, usually two weeks before the interest rate meeting, and investors regard it as an important indicator to observe the Federal Reserve's monetary policy.
The latest edition of the Beige Book shows that in the six weeks ending October 14, among the 12 districts of the Federal Reserve, 3 regions reported economic growth, and 9 regions reported economic activity remaining flat or declining, with both numbers unchanged from the previous period.
"Overall, since early September, there has been little change in economic activity in all regions," the Beige Book stated.
The survey shows that election expectations have begun to affect consumers' spending decisions, with many indicating that they will decide whether to purchase big-ticket items after the election. However, the report states that despite increased uncertainty, respondents remain optimistic about the long-term outlook.
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Kathy Bostjancic, Chief Economist at The Nationwide Mutual Insurance Company, said that compared to the strong official data on employment and retail in September, the Beige Book shows weak economic growth in most parts of the United States. "Given that Powell has indicated an increasing focus on the Beige Book and other data, these weak data provide a reason for the Federal Reserve to continue easing monetary policy," Bostjancic told Marketwatch, a news website owned by Dow Jones. Powell refers to Federal Reserve Chairman Jerome Powell.
Compared to official data, the latest Beige Book presents a weaker picture of the U.S. economy, which will to some extent alleviate market concerns about the Federal Reserve possibly pausing interest rate cuts.
The Beige Book points out that since the Federal Reserve announced a rate cut on September 18, the pace of hiring has continued to slow down. Compared to August, companies are now hiring mainly for "replacement" rather than expansion, and more and more companies are reporting moderate or targeted layoffs. In terms of wages, except for positions requiring professional skills or specific regions, the overall performance is moderate growth.
The survey results on consumer spending are mixed, with some regions mentioning changes in consumption structure, mainly consumers turning to cheaper alternatives. In terms of employment and inflation, more than half of the regions said the labor market has a "slight or moderate" increase; most regions said the price increase is at a "slight or moderate" level.
Regarding the cost of living, which has a significant impact on residential inflation, the Beige Book points out that the real estate market still shows considerable resilience, and even with an increase in inventory, prices generally remain stable or rise slightly. In addition, the survey of corporate inflation expectations shows that unit costs increased by an average of 2.6% year-on-year in September, unchanged from August; companies' expectations for the increase in unit costs over the next year are an average of 2.1%, also unchanged from August.In the primary industry sectors, the manufacturing sector's business confidence has slightly declined, with "most regions" reporting signs of a slowdown; the banking industry is "generally stable or slightly improved" compared to previous weakness. Contacts reported moderate loan growth and anticipate an increase in loan demand as interest rates trend lower.
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