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Joe Scarnici / Getty Images for Target
Perspectives: Economic activity in the crucial sector of non-financial services was either stable or improving throughout the country until the end of August, according to the "Beige Book" survey published Wednesday by the Federal Reserve.
What happened: The survey revealed that the economy as a whole was developing at the same "moderate pace" as in previous reports this year.
US trade policy with China remained uncertain, but most business owners "remain optimistic about short-term prospects," the Fed said. Manufacturing and agriculture were the two weak points of the end of the summer.
Reports on consumer spending have been "mixed", with auto sales continuing at a moderate pace and "solid" tourism activity. Employment grew at a moderate pace, with moderate upward wage growth. Price increases were modest. The companies said that the impact of recent tariffs on Chinese products would not be felt for a few months on the prices that consumers pay at the store.
Big picture: Economists generally do not think that weakness in manufacturing and agriculture will be enough to push the economy into a ditch. Today's report corresponds to the same growth rate of 2% as that observed in the first half.
Fed officials are divided on how to react to fears of a more pronounced slowdown, some advocating no rate cuts, while others advocate aggressive easing at the next 17 political meeting and September 18th. Most economists believe that the safest solution for the Fed will decide to cut interest rates by a quarter of a point at its next political meeting in two weeks, as a result of a similar movement in July.
Interesting anecdotes:
• Boston retailers said that there was a slowdown in obtaining products from non-Chinese Asian manufacturers as ports in these countries would not yet be able to cope with the increased demand for maritime transport.
• In New York, a large retailer said prices for furniture and other expensive items had risen, but that they were likely to reverse those increases as consumers did not react well.
• In Cleveland, manufacturers did not license staff, but took other measures to reduce work: fewer shirts, overtime, fewer temporary employees, and decrease by attrition.
• Richmond District harbors have sustained activity due to the high volume of imports.
• Atlanta retailers saw some uncertainty among consumers about the geopolitical environment and worried about the holiday season.
• Some Chicago retailers have started to increase prices gradually to avoid a "noticeable increase" once rates have come into effect.
Market reaction: The stocks were higher in the hope of ending violent protests in Hong Kong. The S & P 500 index
SPX, + 1.08%
closed up 31.51 points to 2,937.78.
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