Slow global growth weighing on U.S. manufacturers: Fed report
CGTN

U.S. manufacturers increasingly worry trade spats and other factors will dampen their growth prospects, while widespread worker shortages are also hampering industries nationwide, the Federal Reserve said Wednesday.

Even though manufacturers have reported solid growth in recent weeks, and the U.S. economy has continued to turn in respectable albeit slower performance, the Fed's "beige book" survey added more evidence that concerns are building.

President Donald Trump's aggressive trade policies, Brexit and other issues are showing signs of hitting global growth. Trump slapped punishing tariffs on steel and aluminum imports, as well as 250 billion U.S. dollars in goods from China, which drew retaliation against U.S. products.

Meanwhile, wage increases are becoming more widespread as companies compete to fill open positions, although prices "continued to increase at a modest-to-moderate pace" as firms seeing higher input costs still cannot consistently pass them along to consumers, the report said.

The anecdotal reports in the beige book are consistent with the outlooks offered by the International Monetary Fund and Organization for Economic Cooperation and Development, which have downgraded forecasts for the U.S. and global growth this year amid major trade frictions, Brexit and other factors.

And New York Federal Reserve Bank President John Williams said in a speech on Wednesday that the U.S. economy would "slow considerably" this year to around two percent as the boost from last year's economic stimulus fades.

John Williams, president and CEO of the Federal Reserve Bank of New York, speaks during an Economic Club of New York event in New York, U.S., March 6, 2019. /VCG Photo

John Williams, president and CEO of the Federal Reserve Bank of New York, speaks during an Economic Club of New York event in New York, U.S., March 6, 2019. /VCG Photo

Many of the Fed's 12 regional banks said manufacturing activity remained solid or rose and the San Francisco Fed cited a steel manufacturer in Oregon that "noted strong activity in the industry due to lower competition from abroad arising from trade policy actions."

However, "Numerous manufacturing contacts conveyed concerns about weakening global demand, higher costs due to tariffs and ongoing trade policy uncertainty," the Fed said in the report, prepared in advance of the monetary policy meeting of March 19-20.

And in spite of Trump's goal to reduce the U.S. trade imbalance, the U.S. merchandise trade deficit soared last year to its highest level ever, while goods deficits with China, Mexico and the European Union likewise hit records.

Wall Street finished firmly lower on Wednesday, with the S&P 500 shedding 0.7 percent, its latest weak showing after a strong open to 2019. The Dow Jones Industrial Average fell by 0.5 percent and Nasdaq also went down 0.9 percent. 

Source(s): AFP