WASHINGTON — The US economy continued to grow at a tepid pace during the last two months, amid slight improvements in retail sales and the depressed housing market, the Federal Reserve said in a report Wednesday.
“Economic activity continued to expand gradually in July and early August across most regions and sectors,” the Fed said in the Beige Book report on current regional economic conditions.
Prepared for the Fed’s September 12-13 policy meeting, the Beige Book sent mixed signals as the central bank faces market pressure to provide additional stimulus to the economy.
Nomura economist Lewis Alexander said the report “confirmed that incoming data, though better on net in our view, suggests nothing other than an economy that ‘continued to expand gradually.'”
Half of the Fed’s 12 districts reported “modest” growth, while three said it was “moderate”, the report said.
Many districts reported a softening in manufacturing, the sector that has been a key driver of the recovery from a deep 2008-2009 recession.
Retail sales strengthened “somewhat” in July compared with softness in May and June, particularly at discount stores and online.
A bright note was the ravaged housing market, which was showing improvement six years after a price bubble collapsed.
“All 12 of the Fed’s districts cited increases in home sales, home prices, or housing construction” in July and early August, it said.
The jobs outlook, with unemployment stuck above 8.0 percent for more than three years, appeared little changed.
“Most districts reported that employment was stable or growing only slightly,” the report said, adding that it left upward wage pressure across the nation “very contained.”
Earlier Wednesday the government said the economy had expanded at a faster pace in the second quarter than first thought.
The Commerce Department reported a clip of 1.7 percent for gross domestic product growth in the April-June period, revised from 1.5 percent.
The slightly increased momentum of the world’s largest economy heading into the current third quarter did not recast expectations of tepid growth.
The GDP report “does little to alter the view that the US economy continues to tick along at a moderate pace and struggles to break out into a full-on recovery with consistently above-potential growth,” said Michael Gapen, a Barclays analyst.
Markets have been speculating that the Fed’s Federal Open Market Committee will announce a third round of bond buying, or quantitative easing, at its September meeting.
Economists and analysts were on tenterhooks ahead of Fed Chairman Ben Bernanke’s speech Friday at an economic symposium in Jackson Hole, Wyoming, watching for a signal on QE3 or other measures.
But analysts were divided over whether the growth outlook was weak enough to spur more stimulus.
Nigel Gault at IHS Global Insight said that third-quarter growth was facing plenty of risks, from the eurozone public debt crisis to the looming expiration of tax breaks and spending cuts at year-end, known as the “fiscal cliff.”
“The outlook is worse than the Federal Reserve’s June projections, and as a result we expect to see another round of quantitative easing from the Fed, when it meets in September,” he said.
For others, it boosted the argument against more stimulus.
“Growth is neither strong enough for Mr. Bernanke, who speaks on Friday, to take any additional easing off the table but it is hardly weak enough to force him to announce new actions,” said Joel Naroff of Naroff Economic Advisors.
Wall Street Journal drops a truth-bomb on Trump over his market-destroying trade war: ‘Everyone loses’
In yet another blast from the editorial board of the Wall Street Journal, the editors looked back at Friday's stock market free fall and pointed the finger directly at President Donald Trump and his "trade-war general" Peter Navarro for being the main culprits.
After Friday's disastrous stock market session that took a major downturn due to the escalation of the trade war -- with China and Trump ordering billions of dollars in new tariffs -- the Journal pointed out that there will be no winners.
G7 off to a rough start as Trump aides slam host Macron’s agenda
With President Donald Trump at the latest G7 summit, all eyes are on the interactions between him and French President Emmanuel Macron. The two world leaders started off amicably, exchanging pleasantries, but behind the scenes, things have grown contentious.
According to Politico, Trump officials are railing against Macron, accusing him of trying to "fracture" the summit by steering the negotiations away from trade and into areas like climate change.
This development comes after Trump harshly criticized Macron for enacting a tax on digital services, which could increase costs for American tech companies like Google and Facebook. Trump threatened that if France does not suspend its "unfair" digital tax, "we'll be taxing their wine like they've never seen before." It is a threat that Trump has made repeatedly over the last few weeks whenever he has gotten angry at France.
A likely recession could doom Trump
President Donald Trump is worried that there will be a recession before the 2020 election. For once, he is right about something.
This article first appeared in Salon.
"The Economy is strong and good, whereas the rest of the world is not doing so well. Despite this the Fake News Media, together with their Partner, the Democrat Party, are working overtime to convince people that we are in, or will soon be going into, a Recession," Trump tweeted on Friday in a clear attempt to assuage concerns. "They are willing to lose their wealth, or a big part of it, just for the possibility of winning the Election. But it won’t work because I always find a way to win, especially for the people!"