ATFXFederal Reserve Brown Book Release: Weak Demand, Persistent Inflation, and Employment Growth

Federal Reserve Brown Book published annually8Secondary, by12Compiled from reports from local Federal Reserve (Boston Fed, New York Fed, Philadelphia Fed, etc.). Early this morning2:00The Federal Reserve has released the latest version of the Beige Book, which mentions the "Comprehensive Economic Activities" section:Household consumption continues to decrease, shifting expenditure from non essential goods to food and other essential goods; Weak car sales;12Residential sales in all districts have decreased; Expected future6to12The demand for next month will further weaken. This section presents a relatively pessimistic view on the future development of the US economy.

The rest of the section mentions that the employment rate in most regions has grown at a moderate or moderate rate; Prices have significantly increased in all regions, especially for food, rent, utilities, and hospitality services. These statements are consistent with macroeconomic data: unemployment rate3.7%, in a low position; Inflation rate8.5%, in the high range. The inflation rate is likely to reach a turning point before the end of the year, as international oil prices continue to decline,WTILatest value82.69The US dollar has accumulated a decline of nearly30%。

Overall, the Beige Book emphasizes the weakness of US commodity demand, reaffirms the current situation of high prices and low unemployment, interweaves pessimism and optimism, and has a relatively mild impact on the financial market. After the release of the Brown Book, the US dollar index slightly rose and began to decline an hour later, giving up all gains. The Dow Jones index showed a flat response to the brown book and did not show significant fluctuations.

Manufacturing and Service Industries in the United StatesPMIThe data is significantly decreasing.8Month, S&P Global ManufacturingPMIThe data is51.5Although above the boom and bust line, it is the lowest level within the year and the expansion efforts are weak. Service industry during the same periodPMILatest value43.7It is also the lowest value within the year and is below the boom and bust line, with a significant decline trend.

Has the United States experienced an economic recession due to aggressive interest rate hikes? It depends on which economic indicator to measure. The Federal Reserve tends to use labor market data to measure whether the economy is in recession, and due to the historically low unemployment rate, the conclusion is that the United States has not experienced an economic recession. If using the service industry/manufacturingPMIAccording to data, the economic recession in the United States has been ongoing for three months. It can still be usedGDPMeasure quarterly growth rate by annual rate. In the second quarter of this year, the United StatesGDPThe annual growth rate is1.7%, lower than the previous value3.5%, which is much lower than the second quarter of last year12.2%The economic recession has already lasted for a year. Those who firmly believe in the US economic recession are clearly more concernedPMIandGDPThe data deviates from the Federal Reserve's judgment. Judging from past experience, there is a serious lag in the Federal Reserve's judgment of the current state of the US economy, and market participants often have a sharper sense of smell. Perhaps the impact of the US economic recession will soon affect labor market data, thereby altering the Federal Reserve's monetary policy.

ATFXThe analyst team's concise view: All economic analysis reports serve the Federal Reserve's monetary policy, and the Brown Book is no exception. The content of this brown book does not reveal a single pessimistic or optimistic sentiment, and has little significance for guiding the Federal Reserve's monetary policy in the fourth quarter. However, the view of economic recession still exists, and its impact on the labor market needs to be closely monitored.

*Risk Tips and Disclaimers*
There are risks in the market and investment should be cautious. The above contents only represent the views of analysts and do not constitute any operational recommendations.
2022-09-08