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Economic outlook deteriorates as growth, inflation slows: Fed's Beige Book

Published Nov 29, 2023 02:16PM ET Updated Nov 29, 2023 05:10PM ET
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Investing.com -- The economic outlook soured on slowing growth in recent weeks as consumers are keeping a closer on spending amid an easing in the labor market as well as in the pace of inflation, according to the Federal Reserve's Beige Book released Wednesday.

Economic outlook sours as consumers show more caution

Economic activity slowed since the previous report, with retail sales declining, on average, as "consumers showed more price sensitivity," the Fed said in its Beige Book economic report, based on anecdotal information collected by the Fed’s 12 reserve banks through Nov. 17. "The economic outlook for the next six to twelve months diminished over the reporting period," it added.

The more sombre economic outlook comes as the demand for labor continued to ease, with wage growth remaining modest to "moderate in most Districts," according the report, though there continued to be "difficulty attracting and retaining high performers and workers with specialized skills."

Inflation slowdown continues, but remains elevated

The pace of inflation "largely moderated" across districts, though prices remained elevated, the report showed, with a notable rise in utilities and insurance costs across most districts. Most districts, however, expect moderate price increases to continue into next year, the report added.  

The update comes just a day ahead of fresh inflation data expected to show an ongoing easing in price pressures that has boosted bets of rate cuts in the first half of next year.

Data on Wednesday, however, showed the economy grew faster than initially expected in Q3, potentially muddying the optimism over rate cuts as the Fed has repeatedly called for below-trend growth to help with inflation fight. 

"The Fed is buying itself time ... the rate cuts are dependent on a cooling economy and cooling inflation, but I don't see it yet. "We need to see the economic data in Q4," Scott Acheychek, Chief Executive Officer of REX Shares, told Investing.com's Yasin Ebrahim in an interview on Wednesday.  

"I wouldn't be surprised if we just stay in this higher for longer camp as the Fed just really wants to buy some time and see some form of a cooling economy," Acheychek added.

Economic outlook deteriorates as growth, inflation slows: Fed's Beige Book
 

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Comments (3)
Casador Del Oso
Casador Del Oso Nov 29, 2023 3:58PM ET
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Sounds like recession coming. We are already in the middle of a housing market recession and a freight recession with the broader economy soon to follow once interest rates are lowered.
Atlantic Coast Money
Atlantic Coast Money Nov 29, 2023 3:58PM ET
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Whats your prediction for market bottom? Date? Depth?
First Last
First Last Nov 29, 2023 3:58PM ET
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Soft landing has good odds.
D Palmo
D Palmo Nov 29, 2023 3:58PM ET
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The only reason we are not in a recession is the fed incresing its balance sheet through tbills
First Last
First Last Nov 29, 2023 3:58PM ET
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D Palmo   Fed balance sheet has been in decline since early 2022.
Daz al
Daz al Nov 29, 2023 2:27PM ET
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let me guess new highs lol.
Paul Ho
Paul Ho Nov 29, 2023 2:19PM ET
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Does this contradict the GDP growth of more than 5% came out this morning?
lassen 2545
lassen 2545 Nov 29, 2023 2:19PM ET
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GDP report is not forward looking
Dave Ruddle
Dave Ruddle Nov 29, 2023 2:19PM ET
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GDP was raise in government spending but a lowered consumer spending, this would be congruent with this report of a weaker American citizen but business investment is higher as well so light recession.
Maria Kenny
Maria Kenny Nov 29, 2023 2:19PM ET
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last GDP report had significant government consumables spending and not a meaningful increase in consumer spending...so this report is no surprise at all.
Casador Del Oso
Casador Del Oso Nov 29, 2023 2:19PM ET
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Government spending is the root cause of inflation.
First Last
First Last Nov 29, 2023 2:19PM ET
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Casador Del Oso   Gov't spending has been a thing for many decades.  It's Russia's withdrawal from the global economy.
 
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