Tags: atlanta | fed | gdp | growth | view | economy

Atlanta Fed Lowers 3rd-Quarter GDP Growth View Below 3 Percent

Image: Atlanta Fed Lowers 3rd-Quarter GDP Growth View Below 3 Percent
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Thursday, 07 September 2017 11:30 AM

The U.S. economy is on track to grow at a 2.9 percent annualized pace in the third quarter based on the latest data on vehicle sales and trade balance, the Atlanta Federal Reserve’s GDP Now forecast model showed.

The latest third-quarter gross domestic product estimate was below the 3.2 percent growth rate calculated on Friday, the Atlanta Fed said.

Meanwhile, the Fed said the U.S. economy expanded at a modest to moderate pace in July through mid-August but signs of an acceleration in inflation remained slight in the latest survey conducted by the central bank.

“Prices rose modestly overall across the country,” the central bank said in its Beige Book report of the economy, compiled from anecdotal evidence derived from business contacts nationwide.

Policymakers have raised interest rates twice this year but the prospect of a third in 2017 appears increasingly uncertain against a backdrop of weak price pressures despite the U.S. economy humming along with low unemployment and continued growth.

The Fed’s preferred measure of inflation retreated to 1.4 percent in July on a year-on-year basis, the slowest pace in more than 1-1/2 years.

Many of the Fed’s 12 districts reported that businesses were having difficulty filling job openings at all skill levels, but this was not resulting in a widespread boost to salaries.

“The majority of districts reported limited wage pressures and modest to moderate wage growth,” the report said, repeating sentiments expressed in previous Beige Book reports over the past several months.

Businesses in the Atlanta Fed district, for example, faced labor shortages but dealt with them by trying to “increase operational efficiencies by evaluating whether to fold one job into another, replace positions with technology...or shift the salary towards training and development of other employees.”

Elsewhere, the Fed said that consumer spending increased in most districts and that many contacts were becoming worried about a prolonged slowdown in the auto industry.

The slide in inflation prompted influential Fed Governor Lael Brainard to call on Tuesday for the central bank to delay raising interest rates until it is confident the weak readings will rebound.

The Fed is seen holding its benchmark rate steady at its next meeting in two weeks time, but economists largely expect policymakers will take another step in removing accommodation by announcing an imminent reduction of the Fed’s $4.2 trillion bond portfolio.

© 2018 Thomson/Reuters. All rights reserved.

   
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The U.S. economy is on track to grow at a 2.9 percent annualized pace in the third quarter based on the latest data on vehicle sales and trade balance, the Atlanta Federal Reserve's GDP Now forecast model showed.
atlanta, fed, gdp, growth, view, economy
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2017-30-07
Thursday, 07 September 2017 11:30 AM
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