Economic conditions in three-quarters of the United States experienced “flat or declining activity” in August as employment levels held steady and prices increased modestly, according to the latest Federal Reserve report.
While the overall labor market held steady, there were “isolated reports” of companies filling necessary positions, reducing hours and shifts, and lowering payrolls through attrition. Layoffs “remained rare” last month.
“Employers were more selective with their hires and less likely to expand their workforces, citing concerns about demand and an uncertain economic outlook,” the report reads.
On the inflation front, wage growth was “modest” and increases in businesses’ input costs and selling prices “ranged from slight to moderate.” However, the Fed’s contacts anticipate that cost and price pressures will “stabilize or ease further in the coming months.”
Consumer spending dipped in most Fed districts, while automobile sales varied by districts.
Manufacturing activity declined in most of the country, according to the Fed report. This was observed in the various regional central bank manufacturing surveys, such as the New York Fed’s Empire State Manufacturing Index and the Richmond Fed Manufacturing Index, highlighting a slumping sector.
Commercial and residential real estate industry construction was mixed in the reporting period, which was gathered on or before Aug. 26.
Recent Economic News
The financial markets were spooked again by two key manufacturing reports.The S&P Global Manufacturing PMI weakened for the second consecutive month in August and came in slightly below the consensus estimate.
Chris Williamson, chief business economist at S&P Global Market Intelligence, warned that the latest U.S. manufacturing report sent “warning signals on economic conditions” as demand slowed, output fell, employment declined, and input costs unexpectedly rose.
Construction spending also slipped by 0.3 percent in July.
![Workers assemble cars at the newly renovated Ford Assembly Plant in Chicago on June 24, 2019. (Jim Young / AFP via Getty Images)](/_next/image?url=https%3A%2F%2Fimg.theepochtimes.com%2Fassets%2Fuploads%2F2024%2F08%2F29%2Fid5714665-GettyImages-1151712640-600x413.jpg&w=1200&q=75)
The ISM’s August Services PMI will be released on Sept. 5 and is expected to show a tepid decline in activity.
The leading U.S. stock market benchmark indexes plummeted following the manufacturing figures, with the blue-chip Dow Jones Industrial Average plunging by more than 600 points. The tech-heavy Nasdaq Composite Index declined by more than 3 percent, while the S&P 500 tumbled by 2.2 percent.
Stocks were little changed on Sept. 4 after new data assuaged slowdown fears. Factory orders surged at a higher-than-expected pace of 5 percent in July.
A soft landing—a moderate slowdown in economic growth without breaking the labor market—is the likely scenario, although other possibilities are being monitored closely, according to Jennifer McKeown, chief globalist economist at Capital Economics.
“I think it’s much too soon to be really concerned that we’re heading back into a recession, but these are risks that we’re monitoring really closely,” McKeown said during a live webinar on Sept. 4. “The more indicators turned down, of course, the more worried you become.”
Based on regional central bank models, the U.S. economy is expected to avert a recession in 2024.