Companies polled by the Federal Reserve reported modest growth in the last month and a half of the year, according to the Fed’s Beige Book.
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Growth in economic activity in the United States remained “moderate” in late 2019, and entrepreneurs are cautiously optimistic for the months ahead, looking to the 2020 presidential election, according to the Fed’s Beige Book.
Companies surveyed by the US Central Bank (Fed) in its 12 regions reported modest growth in the last month and a half of the year. It was above average in the Dallas and Richmond areas, lower in the Philadelphia, Saint Louis and Kansas City areas.
“In several regions, tariffs and commercial uncertainty have continued to weigh on some businesses,” said the Fed in its Beige Book, published every six weeks, referring to the all-out trade war unleashed by Donald Trump.
A Boston-area fishmonger said that while tariffs have stabilized, the costs that remain high are difficult to get supermarkets to accept.
And the possible new customs sanctions on French wines – to punish Paris with its GAFA tax – have prompted a trader in the Philadelphia region to stock more than 35,000 cases so as not to face the immediate rise in prices.
Over the period, consumer spending, the main driver of the US economy, advanced at a low level, although it recovered in several regions.
As a result, year-end sales were solid, and online commerce continued to grow.
During the Christmas holidays, Brodway theaters experienced their usual peak attendance, but filled a little less than last year. On the other hand, ticket prices have increased.
Price up
Manufacturing activity, which has been contracting in the country for several months but which had recovered somewhat in the fall, remained stable. Along with agriculture, it is the sector that has borne the brunt of President Donald Trump’s trade war against China.
The situation should nevertheless improve, since the first two world economic powers signed on Wednesday an agreement which must put an end to this conflict, and in which China promised to buy for 200 billion dollars of additional American products during for the next two years.
In most regions, employment has either remained stable over the last six weeks of 2019, or has increased slightly, due to a tight labor market in the country, the Fed notes.
As for prices, they have continued to grow at a moderate level, and should continue to climb. Some regions note that the costs of raising tariffs have been passed on to consumers, mainly in the retail and construction sectors.
Uncertainties surrounding the US presidential election in November 2020 are also starting to worry entrepreneurs.
A Boston-area surveyed firm anticipates more reserved long-term decisions, while in the Dallas area, many have expressed concern about the impact of the election on the real estate market.
The next Fed monetary meeting is scheduled for January 28 and 29. The Central Bank is pausing in rate cuts, after three cuts in the cost of credit in a few months to protect the business from risks linked to trade tensions and slowing global growth.
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