Fed Warns on Slow Economy, High Fuel Costs for Trucking
The warning came in the Fed’s “beige book” report that is issued about two weeks ahead of each meeting of the policy-setting Federal Open Market Committee.
The FOMC’s next meeting is May 15, and it is widely expected to cut rates again despite four cuts of a half-point so far this year.
Each beige book report (named for the color of its official binder) is a compilation of separate reports prepared by economists at the 12 regional Fed banks, with a summary written at a different Fed bank each time. The St. Louis Fed staff wrote the current summary.
While the economy moved slowly along this spring, “nearly all districts report that energy costs are up sharply, hitting historic highs in some areas,” the Fed said.
It added that “the trucking industry has been hit the hardest by high gasoline prices. Several districts, especially Dallas and San Francisco, report that firms are increasingly passing on these high costs to customers as fuel surcharges.”
In addition, retail sales declined in March, but picked up some in the first part of April. However, nearly all the Fed banks said retailers in their areas expected “only mild sales growth, if any, in the upcoming months.”
Since consumer spending accounts for two-thirds of the economy that suggests the slump will continue a while. So does what the report said about the U.S. factory sector.
“Manufacturing activity continues to weaken across districts, with demand having fallen in most industries,” the Fed said. That is most obvious in high-tech production.
And some Fed regional banks reported special concern about high costs for electricity, which could hit both consumer and business spending.
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