American companies more pessimistic, uncertainties grow

American companies more pessimistic, uncertainties grow
American companies more pessimistic, uncertainties grow

Washington (awp/afp) – Economic activity remained growing in the United States in the spring, according to a survey published Wednesday by the Fed, which however shows variable conditions depending on sectors and regions, and growing pessimism for months to come.

“Economic activity continued to grow from early April to mid-May, however, conditions varied by sector and region,” details the American central bank (Fed) in its “Beige Book”, a survey carried out among businesses and economic players, in April and early May.

But “the outlook has become a little more pessimistic due to reports of increasing uncertainty and greater downside risks,” it said.

The American economy, in fact, remained surprisingly resilient in 2023, and the fall in inflation during the last months of the year gave hope for a reduction in rates, which was a Source of optimism.

But a rebound in prices in early 2024 led the Fed to push back this prospect. Inflation nevertheless began to slow again in April.

Businesses “in most regions noted that consumers resisted further price increases, which led to lower profit margins,” the Beige Book points out.

“A Montana restaurant and hotel owner is trying to avoid passing on further cost increases to customers,” the Fed reports, quoting him: “at some point they will say, ‘I’m not paying $20 for a hamburger+”.

In New York, hotel prices have stopped soaring, but rates “are significantly higher than before the pandemic”, which “many visitors compensate (…) with a reduction in shopping and dining”.

The Fed’s high interest rates push banks to in turn offer expensive loans to their customers, both individuals and professionals.

Thus, again in New York State, “interest rates on auto loans have increased significantly in recent months and, coupled with rising car prices, new cars have become unaffordable for many people “.

“Block” ___

As for the tensions observed in recent years on the job market, they are slowly being resolved, but the situation is not uniform.

“The majority of regions reported greater availability of labor, even if some shortages remain in certain sectors or areas,” underlines the Fed.

The so-called “Great Resignation” movement linked to the labor shortage after the Covid-19 pandemic seems to be over. Thus, towards Philadelphia, there are now “more job candidates”.

But around San Francisco, “one contact described the labor market as being in a ‘lockdown’ situation: employers are generally not laying off workers, and workers are not quitting as often as in recent years.”

In Minnesota, it was noted that job seekers were “hesitant to accept a job offer if the hours were inflexible or the pay was insufficient to meet their needs.”

And in touristy northern Michigan, home to the Great Lakes, “many older workers wanted more flexibility in their schedules rather than retirement.”

Faced with the labor shortage, many business leaders had accelerated the automation of certain tasks. In Boston, “a major clothing retailer laid off 150 employees by closing a call center, citing a move toward more automated customer service technologies as motivation.”

The next Fed meeting will take place on June 11-12. It should keep its rates in the range of 5.25 to 5.50% in which they have been since July 2023, their highest level in more than 20 years.

afp/rp

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