2024-01-17 20:38:50
The drop in interest rates in the United States, expected in the coming months and linked to the slowdown in inflation, is a “source of optimism” for businesses in the country, despite stable economic activity, according to a survey of the Fed published on Wednesday.
“The prospect of a drop in interest rates was cited by many interlocutors in different sectors as a source of optimism,” noted the American Federal Reserve (Fed) in its beige book.
This survey was carried out among businesses and economic players between mid-December and the beginning of January.
“High interest rates limit automobile sales and real estate transactions,” it is stated.
The Fed signaled, during its last meeting in mid-December, that it was considering several rate cuts in 2024. They have been between 5.25 and 5.50% since July, the highest in more than 20 years. .
Because inflation seems on track to return to its target level of 2% in 2025.
Businesses in most regions cited examples of stable or falling input prices, particularly in the manufacturing and construction sectors, and more discounts at car dealerships.
The job market is rebalancing following more than two years of labor shortage, according to this survey: “almost all regions” reported “larger numbers of candidates, higher turnover rates weaker, more selective hiring by companies and a relaxation of wage pressures.
As for economic activity, “the majority of the Federal Reserve’s twelve regions have reported little or no change” since late November, with “three reporting modest growth and one a moderate decline.”
On the other hand, “a decrease in manufacturing activity” was observed almost everywhere.
And “concerns regarding the office market, weakening demand and the 2024 political cycle have often been cited as sources of economic uncertainty”, with, however, expectations for growth mostly positive, or, at least, better than during the previous survey.
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