The Federal Reserve is reporting that the U.S. economy weakened from late February to early April, with soft consumer spending, a struggling housing market and tightening credit.
The Fed’s anecdotal look at conditions found that activity slowed in nine of its 12 districts and was “mixed” or “steady” in three: Boston, Cleveland and Richmond. Cost pressures were “widespread,” a point underscored by a separate U.S. Labor Department report that consumer inflation jumped 4 percent in the past 12 months. The Fed is caught between slow growth and rising prices as it debates cutting a key interest rate at its April 29-30 meeting.
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Price Pressures
In most of Connecticut, price pressures are an issue. Only a slice of the businesses say they are able to pass some of their higher costs on to clients. Many businesses are worried about credit market turmoil.
Retailers say big ticket items, including home-related items, are not moving well. Apparel, shoes, accessories, televisions, and sporting goods are strong. Many manufacturers have been helped by robust overseas sales, but some warn the outlook might not be as favorable ahead. Many worry about “high, rising, or volatile materials costs.”
In Fairfield County, the economy has shown further weakening. Manufacturers say business tailed off substantially in February and early March and that it has been flat since. Non-manufacturing businesses also see softening and little change in employment.
Housing markets are deteriorating further and commercial real estate markets also have slackened. Bankers report weakened demand across all loan categories except residential mortgages. Delinquency rates rose in all categories, and increases are now more widespread than at any time in at least 13 years of the survey.
