Prospects for the US economy appear to be flagging, with slower growth expected in the coming months, as November’s presidential election and inflation contribute to uncertainty, the Federal Reserve (Fed) said on Wednesday.
There has been “slight to modest” growth in economic activity in most parts of the country over recent weeks, the US central bank said in its “beige book” survey of economic conditions.
However, a growing number of districts have reported “flat or declining activity,” it said.
Photo: Sarah Silbiger, Reuters
“Expectations for the future of the economy were for slower growth over the next six months due to uncertainty around the upcoming election, domestic policy, geopolitical conflict and inflation,” the Fed said.
The bank has been closely monitoring the world’s biggest economy for signs of cooling, as it mulls the right time to start lowering interest rates.
A series of encouraging data recently, including a slower-than-expected inflation figure, have fueled optimism that the Fed can begin reducing rates in September.
For now, wages continue to grow in most areas, although demand for consumer and business loans was soft, the Fed’s report said.
Employment ticked up as well, with most districts reporting flat or slight growth, the report said.
The central bank is becoming more convinced that inflation is headed back to its 2 percent target, Fed Chair Jerome Powell said on Monday, adding that the Fed would cut rates before the pace of price increases actually reached that point.
“If we were to see an unexpected weakening in the labor market, then that might also be a reason for reaction by us,” Powell said.
On Tuesday, Federal Reserve Governor Adriana Kugler said that if the labor market cools too much, with layoffs driving a continued rise in unemployment, it might be apt to cut rates sooner.
Semiconductor shares in China surged yesterday after Reuters reported the US had ordered chipmaking giant Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) to halt shipments of advanced chips to Chinese customers, which investors believe could accelerate Beijing’s self-reliance efforts. TSMC yesterday started to suspend shipments of certain sophisticated chips to some Chinese clients after receiving a letter from the US Department of Commerce imposing export restrictions on those products, Reuters reported on Sunday, citing an unnamed source. The US imposed export restrictions on TSMC’s 7-nanometer or more advanced designs, Reuters reported. Investors figured that would encourage authorities to support China’s industry and bought shares
TECH WAR CONTINUES: The suspension of TSMC AI chips and GPUs would be a heavy blow to China’s chip designers and would affect its competitive edge Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, is reportedly to halt supply of artificial intelligence (AI) chips and graphics processing units (GPUs) made on 7-nanometer or more advanced process technologies from next week in order to comply with US Department of Commerce rules. TSMC has sent e-mails to its Chinese AI customers, informing them about the suspension starting on Monday, Chinese online news outlet Ijiwei.com (愛集微) reported yesterday. The US Department of Commerce has not formally unveiled further semiconductor measures against China yet. “TSMC does not comment on market rumors. TSMC is a law-abiding company and we are
FLEXIBLE: Taiwan can develop its own ground station equipment, and has highly competitive manufacturers and suppliers with diversified production, the MOEA said The Ministry of Economic Affairs (MOEA) yesterday disputed reports that suppliers to US-based Space Exploration Technologies Corp (SpaceX) had been asked to move production out of Taiwan. Reuters had reported on Tuesday last week that Elon Musk-owned SpaceX had asked their manufacturers to produce outside of Taiwan given geopolitical risks and that at least one Taiwanese supplier had been pushed to relocate production to Vietnam. SpaceX’s requests place a renewed focus on the contentious relationship Musk has had with Taiwan, especially after he said last year that Taiwan is an “integral part” of China, sparking sharp criticism from Taiwanese authorities. The ministry said
US President Joe Biden’s administration is racing to complete CHIPS and Science Act agreements with companies such as Intel Corp and Samsung Electronics Co, aiming to shore up one of its signature initiatives before US president-elect Donald Trump enters the White House. The US Department of Commerce has allocated more than 90 percent of the US$39 billion in grants under the act, a landmark law enacted in 2022 designed to rebuild the domestic chip industry. However, the agency has only announced one binding agreement so far. The next two months would prove critical for more than 20 companies still in the process
RSS