Fed’s ‘Beige-Book, “US Economy Has Slowed”
$DIA, $SPY, $QQQ, $VXX
The economy grew at a slowed pace this past Summer in 8 of the Federal Reserve’s 12 US districts, a slowdown from prior reports that will make US Fed policymakers cautious about an interest rate hike anytime soon.
The Fed’s ‘Beige Book’ survey of business conditions found that growth slowed in 2 districts: Philadelphia and Richmond. The economy was unchanged in New York and Kansas City. In its last report in July, growth was “modest” in 11 of 12 districts.
The report comes after last Friday’s jobs figures showed that hiring slowed in August to 50% the pace seen in June and July. And a business survey found that manufacturing activity contracted last month. Such readings likely darken the outlook for most Fed officials.
Consumer spending and retail sales were flat across the 12 districts, the Beige Book said, a potential concern since robust consumer spending has been one factors lifting the economy this year. Home sales have increased, the report said.
The Fed’s Beige Book report is based on discussions with business leaders in each regional district. Its results will be considered at the next FOMC meeting on 20-21 September. Fed policymakers will weigh whether to raise the short-term interest rate that it controls for the 1st time this year.
The rate was pinned at nearly Zero for 7 years during the Great Recession and the following anemic recovery. The Fed increased it 0.25 point last December.
It is not expected that the US Fed will lift rates in 2 weeks.
The CME fed funds futures trade indicates that there is only a 15% chance of a hike. And the odds of an increase at their December meeting have fallen to 46%.
Many economists expect growth to quicken in Q-3 of this year, to between 2.5 and 3%, an improvement from 1-H of this year, when growth was under 1%. The recent economic data indicates the that the US economy will remain anemic.
Wednesday, the US major stock market indexes finished at: DJIA -11.98 at 18526.14, NAS Comp +8.02 at 5283.93, S&P 500 -0.33 at 2186.15
Volume: Trade on the NYSE was light at 803-M/shares.
- Russell 2000: +11.0% YTD
- S&P 500: +7.0% YTD
- DJIA: +6.3% YTD
- NAS Comp: +5.5% YTD
|HeffX-LTN Analysis for DIA:||Overall||Short||Intermediate||Long|
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|Neutral (0.20)||Bearish (-0.25)||Very Bullish (0.60)||Bullish (0.25)|
|HeffX-LTN Analysis for VXX:||Overall||Short||Intermediate||Long|
|Very Bearish (-0.57)||Bearish (-0.35)||Very Bearish (-0.61)||Very Bearish (-0.75)|
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