Washington, United States—US economic activity eased in recent weeks, while uncertainty and “increased pessimism” clouded the country’s outlook amid high prices and rising interest rates, a report published by the Federal Reserve said Wednesday.
The Fed’s latest “beige book” survey of economic conditions comes as the US central bank pushes on with its all-out effort to cool surging inflation, although Fed chief Jerome Powell also signaled Wednesday that it was likely time to slow aggressive rate hikes soon.
“Economic activity was about flat or up slightly” since the last report in mid-October, said the latest release.
While five of the Fed’s 12 districts reported small gains in activity, the rest “experienced either no change or slight-to-modest declines,” added the report, which surveys firms and other contacts.
“Interest rates and inflation continued to weigh on activity, and many contacts expressed greater uncertainty or increased pessimism concerning the outlook,” the report said.
Consumer spending was mixed but eked out slight gains, with inflation nudging some buyers towards lower-priced goods, while tourism saw some improvement as well.
Higher interest rates took a toll on home sales, which fell “steeply” in some districts.
In the labor market, demand weakened overall, according to the report, which noted there were “scattered layoffs” in the technology, finance, and real estate sectors.
At an event in Washington on Wednesday, Powell said, “the time for moderating the pace of rate increases may come as soon as the December meeting” of Fed policymakers.
Markets welcomed the news with US stocks rallying, but Powell also stressed that the Fed would “stay the course until the job is done,” given that history cautions strongly against loosening policy prematurely.