Home > Finance and Economics > Fed: Economy “decelerating”

Fed: Economy “decelerating”

The Fed’s latest Beige Book report is out and shows an economic pulse that’s barely beating:

The U.S. economy continued growing this summer but “with widespread signs of deceleration,” according to a new report on business conditions around the country.

The Federal Reserve’s “beige book,” an eight-times-a-year compilation of anecdotal information from companies in the 12 Fed districts, offers a portrait of an uncertain economic moment in which growth has slowed in much of the United States.

“Economic growth at a modest pace was the most common characterization of overall conditions,” said the report, released Wednesday afternoon and based on interviews with businesspeople from mid-July through the end of August. However, five of the regional Fed banks east of the Mississippi River “highlighted mixed conditions or deceleration in overall economic activity.”

[…]

The anecdotal information contained in the beige book is consistent with a slew of economic reports showing that the burst of growth in late 2009 and early 2010 has not persisted through the summer, as the impact of businesses rebuilding their inventories and fiscal stimulus fades.

Therein lies the failure of Keynesian government spending used to stimulate demand.  It generally is a one-time shot in the arm and does little to promote sustainable long-term growth.

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