US Economy Is Showing Signs Of Slowing

By: Dr. Mike Campbell

The Federal Reserve produces a report known as the Beige Book eight times per year. The report is intended to take the economic pulse of the nation by making a survey of business views across the nation and be a useful tool for setting fiscal policy at the Federal Reserve. The current edition of the report has identified widespread signs of economic deceleration in the six week period to the end of August. The finding is in line with other economic indicators that suggest that the recovery in the world’s largest economy is losing momentum.

The Beige Book noted "continued growth in the national economic activity during the reporting period of mid-July through the end of August, but with widespread signs of deceleration compared with preceding periods".

One positive note to emerge from the report was that US consumer sentiment is showing a slight improvement. This is important since domestic demand is the mainstay of the US economy, accounting for roughly two thirds of economic activity. Revised figures show that the US economy grew at 1.6% in the second quarter on an annualised basis.

The construction industry was identified as being particularly badly hit during the review period. The ending of governmental incentives to bolster the housing sector had produced a knock-on effect of falling home sales and a consequent decrease in the orders for new construction.

The report highlighted the creation of 67000 private sector jobs last month as a positive sign which suggests that the US economy will avoid the dreaded double-dip recession.