According to the Federal Reserve’s “beige book” survey released on Wednesday, United States (US) experiences huge recession in economy since past month which was on expansion ever. This is very challenging situation for US.
The outlook for future economic growth was mostly pessimistic among the reporting Districts, with contacts noting expectations for further weakening of demand over the next six to twelve months, the review of the national economic conditions came to the conclusion. “Similar to the previous report, the outlook for future economic growth was mostly negative among reporting Districts.”
The announcement was made on the same day that the government reported that consumer prices increased at an annual pace of 9.1 percent in June, which was the highest level since late 1981. The price of electricity and food were the primary contributors to the increase; however, housing also played a significant role.
A sluggish economy that is concurrently confronted with extreme price pressures presents the Federal Reserve with a challenging scenario as it mulls over the possibility of implementing a significant interest rate hike later this month as a follow-up to the 75 basis point increase implemented in June.
After reviewing the data, Charlie Ripley, a senior investment strategist at Allianz Investment Management, stated the following after the CPI was published on Wednesday morning: “Inflation remains buried across numerous parts of the economy even when taking away food and energy prices.”
Ripley continued by saying that as a consequence of this, the Federal Reserve is very likely going to deliver a hawkish message at the meeting in July, and it would be a mistake to suppose that a rate hike of less than 75 basis points is in the cards. “The question that remains from here is how high the Fed will need to raise rates in order to bring down inflation, and a CPI print like today could put a 4 percent policy rate on the horizon fairly soon,” said Fed Chair Jerome Powell. “The question that remains from here is how high the Fed will have to raise rates in order to bring down inflation.”
Inflation was thought to have peaked in May, according to the forecasts of some analysts; however, figures released on Wednesday proved that this was really wishful thinking. And now the benchmark has been pushed to the beginning of the following month, when July’s CPI will be made public.
However, as the beige book demonstrates, businesses still anticipate having to contend with price increases for an extended period of time.
A point that President Joe Biden made from Israel, where he is on the first leg of a Middle Eastern trip, is that one component of the CPI has been turning down recently, with gasoline prices off by 35 cents or more since the data was collected. Biden made this point while he was on the first leg of his trip.
According to Biden, “although today’s headline inflation reading is unacceptably high, it is also out of date.” “By itself, the price of energy accounted for roughly half of each month’s increase in inflation.”
According to Biden, “today’s report does not represent the full impact of nearly 30 days of decreases in gas prices,” which have resulted in a decrease of approximately 40 cents in the price of gas at the pump since the middle of June. “These cost-cutting measures are giving families in the United States a much-needed sigh of relief.” In addition, the price of wheat and other commodities has significantly decreased since the release of this study. Inflation widened its scope and in some cases accelerated over the past month, according to the Consumer Price Index (CPI), despite the fact that White House officials have emphasised the report’s focus on the past. The Federal Reserve is dedicated to bringing inflation under control, but there is a risk that doing so would trigger a recession.
A new survey was released on Wednesday by the Pew Research Center, which demonstrated the political ramifications caused by inflation as well as the toll it is having on Americans.
The public’s opinions of the national economy have worsened since the beginning of this year, according to the findings of a study that was done by the Pew Research Center’s American Trends Panel from June 27 to July 4. The survey was carried out between the dates of June 27 and July 4. “Six months ago, 28 percent of respondents in the United States indicated that the economic conditions were outstanding or good; today, only 13 percent of adults feel that these conditions are true.”
They place the responsibility on Biden. “The majority of Americans believe that Joe Biden’s policies have had a negative impact on the economy. Fifty-six percent of Americans believe that his policies have contributed to a deterioration in economic conditions, while only 11 percent believe that his policies have contributed to an improvement in economic conditions. A little less than a third of people (32%) believe that they have not had much of an effect.
The beige book made note of the fact that prices were increasing in a number of Federal Reserve bank districts, but it also mentioned that some of those districts were reporting some stabilisation in areas such as building supply prices. However, it was stated that “most contacts expect pricing pressures to endure at least through the end of the year.”