Fed reveals grim forecast in yet another troubling sign for the economy

The Federal Reserve released its Beige Book report on the nation’s economic health on Wednesday, indicating that the US economy remained “generally weak” as regional banks across the country reported contractions.

The survey found that the five districts represented by New York, St. Louis, Minneapolis, Richmond and Chicago all experienced contractions in economic and business activity, while growth occurred in the five districts represented by Atlanta, Dallas, Kansas City, San Francisco and Boston, according to the Federal Reserve. Despite nine out of twelve districts reporting a reduction in inflationary pressures, prices are expected to remain “highly elevated”[ads1]; at least through the end of the year, with essentials such as food, rent and utilities among the hardest hit.

“Most regional banks are watching their respective economies head on, as the short and anemic growth in the third quarter gives way to outright decline,” EJ Antoni, regional economics fellow at the Center for Data Analysis at The Heritage Foundation, told the Daily Caller News Foundation . “About half of the regions are already in contraction territory. There is already an extensive decline in new orders [for businesses]a forward-looking indicator.” (RELATED: Famous Investor Who Predicted ’08 Market Crash Warns of ‘Tragedy’)

In August, the Federal Reserve Banks of New York, Dallas, Philadelphia and Richmond each reported that new manufacturing orders were down, which Antoni warned is a sign of weakening economic conditions. Those results are consistent with those of the Global Purchasing Managers’ Index (PMI), which found the global economy slowed as new orders fell, with the United States contracting the fastest, according to a Tuesday report from S&P Global and JP Morgan Jage.

Even where contractions have not yet begun, growth is noticeably slowing, Antoni told DCNF.

“As economic activity everywhere slows, the places that already had the slowest growth are just the first to enter contraction territory,” he said.

Business people and other experts surveyed in Philadelphia, Chicago, Dallas and Boston all expressed concerns about a recession, according to the Federal Reserve. Nearly three-quarters of private economists believe the Federal Reserve will induce a recession if it succeeds in reducing inflation over the next two years, according to an Aug. 22 report from the National Association for Business Economics.

Federal Reserve Chairman Jerome Powell wrote in a speech on August 26 that “a little pain” for businesses and households was an acceptable consequence for the Fed to curb inflation.

The Federal Reserve is expected to raise interest rates at its next meeting as part of ongoing efforts to fight inflation, but whether it will do so by 0.5% or 0.75% is not certain, according to Bloomberg.

The Federal Reserve Board did not immediately respond to a request from the Daily Caller News Foundation for comment.

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