February 28, 2024

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Economic activity slows in the United States due to increased “price sensitivity” among consumers

Economic activity slows in the United States due to increased “price sensitivity” among consumers

Madrid, November 29 (European Press) –

The US Federal Reserve said on Wednesday that the US economy slowed compared to the October Beige Book report, referring to the document that provides a detailed assessment of the economy of the country’s 12 regional central banks.

The North American Edition Institute noted that four regions recorded “modest growth,” two experienced “flat to slightly declining” development, and the remaining six regions experienced “minor declines” in activity.

In this way, retail spending and car sales provided “mixed” signals, and sales of non-essential products and durable goods, such as furniture or appliances, declined after increasing “price sensitivity” on the part of consumers. For its part, tourism activity was “generally healthy,” while demand for transportation services was “weak.”

The Fed’s communications with financial institutions reported “minor declines” in demand for credit for businesses, especially real estate. However, consumer credit quality was described as “reasonably healthy”, despite increased delinquency rates over the period analysed.

In addition, the commercial real estate sector continued to slow due to office and “multifamily activity,” so the inventory of homes for sale grew after recording fewer residential sales.

Subsequently, the industry also showed “mixed” signs and reported a worsening outlook for the sector.

The primary sector showed “stable to slightly positive” conditions after higher sales prices were announced, although crop volume had a “mixed” sign.

In short, public confidence regarding the development of the world’s leading economy over the next six to 12 months has been damaged, according to the Federal Reserve.

Labor and prices

Labor demand continued to decline with most regions recording “moderate to no” overall employment growth. Most reported an increase in the number of job seekers, and many noted that the worker retention rate had also improved.

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Consequently, the workforce was reduced through layoffs or incentive separations, and some companies laid off their less productive employees. However, several regions continued to describe the labor market as “tight” and suffering from a shortage of skilled workers.

Wage bill growth remained “modest to moderate” in most regions, with pressures in many regions reducing or even salaries for newly hired workers falling. However, there are still some pressures and difficulties in attracting and retaining talent.

Likewise, price increases were largely contained in all regions, although prices remained “high.” Shipping and transportation costs fell, while the costs of “miscellaneous” foods rose.

Many people contacted indicated that costs of construction inputs, such as steel and lumber, have stabilized or even decreased. On the contrary, the increase in the cost of public services and insurance was “significant” in all regions. Providers were able to pass on the increase in costs more easily than in industry.

Finally, two regions identified the high cost of debt as an obstacle to business growth. Most regions expect prices to continue to moderate next year.