Conditions in the US economy deteriorated in the month to July 14, the Federal Reserve said on Wednesday, as American consumers and businesses continued to struggle with rising prices, tight credit and slow growth.
According to the “beige book”, which summarises anecdotal evidence provided to the US central bank, “the pace of economic activity slowed somewhat since the last report [on June 11]”. It said that in particular five districts on the east coast, from Boston to Atlanta and including New York, had experienced a “softening or weakening” in their economies.
The report highlighted that consumer spending was “sluggish or slowing” across the country, despite the fact that the US government has injected about $100bn into the economy through tax rebate cheques, designed to spur shopping, since early May.
It added that price pressures were “elevated or increasing” in all of the districts as input prices rose due to soaring commodity costs, validating growing concerns about inflation.
However, a more encouraging aspect of the report was that retail price inflation was stable in some regions and the soft labour market was keeping wage pressures “generally limited”.