Fed: US economy remains sluggish

| September 8, 2011 | 0 Comments

The latest Beige Book report, published by the Federal Reserve today, has revealed widespread signs that US economic growth continues to slow.

The Fed said: “Economic activity continued to expand at a modest pace, though some districts noted mixed or weakening activity.”

The economic recovery of the US remains sluggish in the face of higher unemployment, weak retail sales and a depressed housing market.

The US central bank has previously said the economy is weaker and that policymakers will explore ways to boost growth and lower unemployment at its policy meeting later this month.

Last week, the Labor Department said the economy added no new jobs last month, which was a surprise after markets had expected 70,000 new jobs.

This represented the first time since 1945 that there has been a zero payrolls figure after 17,000 jobs were added in the private sector last month but these were cancelled out by 17,000 jobs lost in the public sector.

The influential Beige Book, which is based on a survey of business views from around the US, is compiled eight times a year and is used to help set interest rates in the world‘s largest economy.

Its next meeting commences on 20 September.

Interest rates have stood at the range of zero to 0.25% since December 2008, in an attempt to stimulate growth and the Fed has previously hinted that rates will stay at this historic low until 2013.

Meanwhile, the report said: “Several districts also indicated that recent stock market volatility and increased economic uncertainty had led many contacts to downgrade or become more cautious about their near- term outlook.”

The book comes a day before President Barack Obama is due to detail a new plan for boosting growth and jobs.

In related news today, the Paris-based Organisation for Economic Cooperation and Development (OECD) has revised its growth forecast for the US economy.

The economy is now expected to see growth in the third quarter of 1.1% and 0.4% in the fourth – this is far lower than the previous estimates of 2.9% and 3%.

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