Business

Fed report released
by Martina Janeckova

On Wednesday July 23, 2008, Fed released new snapshot of business conditions. It shows that USA is still facing slower economic growth and rising prices. Many economists predict that Fed will probably leave the key interest rate unchanged when it meets on August 5. It’s because higher rates would hurt the fragile economy and the already injured housing market but on the contrary lower rates would worsen inflation. Growth and inflation indicators turned worse in the summer and some worry that economy could face stagflation, the combination of stagnant growth and steady inflation. Federal reserve Chairman Ben Bernake said, however, that he doesn’t believe the economy will suffer from stagflation. Fed reported that according to the information from Fed’s 12 regional banks the economic activity slowed down. Consumer spending was reported slowing in nearly all the Fed regions. Especially sales at stores for housing-related goods were characterized as weak. Auto sales were characterized weak too, especially for SUVs, trucks and minivans. The manufacturing activity declined, but on the positive side, overseas demand for U. S. exports remained high. This is mainly because of the drooping value of the U. S. dollar. Many Fed regions said that manufacturers planned to rise prices to customers because of the rising costs. Regarding jobs, most Fed regions said employment conditions were about the same. Wage pressures were described as “generally modest”. Bernake said he doesn’t see a repeat of 1970s, when workers demanded and got higher wages but Charles Plosser, president of the Federal Reserve Bank of Philadelphia has warned that Fed might need to raise rates sooner than later to defeat inflation.

by Martina Janeckova for PocketNews (http://pocketnews.tv)

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edited by Beata Biskova

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posted by Blog TechSource @ 1:17 AM