New Data Show Economy Slowing; Survey of Business Activity May Prompt Fed to Leave Interest Rates Unchanged
The red-hot U.S. economy began showing more signs of slowing in the late spring and early summer, the Federal Reserve reported yesterday in its latest survey of business activity throughout the country.</br></br>While the economy was in no danger of tipping into recession, the Fed survey found slower activity in consumer spending, manufacturing and construction in June and July. The conclusions were based on reports submitted by the Fed's 12 regional banks and intended for Fed policymakers to use when they next meet on Aug. 22.</br></br>While economic growth accelerated in the spring, most analysts believe recent signs of a cool-down will persuade the Fed to leave interest rates unchanged at the August meeting.</br></br>Over the past 14 months, the central bank has raised short-term interest rates six times in an effort to slow the economy enough to keep inflation under control, achieving what is often called a "soft landing" for the economy.</br></br>The Fed's latest survey said, "Economic activity in all Federal Reserve districts continued to expand in June and July, but there were additional signs the expansion was moderating in some sectors and the majority of districts."