Asian Turmoil Starting To Affect U.S., Fed Says; Impact Is Slight at Present, Report Indicates
The financial turmoil in several Asian countries has begun to have a direct impact on the U.S. economy in the form of reduced orders for manufactured goods and agricultural products and additional competition from imports, according to the Federal Reserve.</br></br>That finding turned up in the Fed's latest nationwide survey of economic conditions, the results of which were released yesterday.</br></br>So far, however, the impact is small, and the survey found "a continued moderate pace of economic growth" nationwide since the previous survey in October. The surveys are done eight times a year by the Fed's 12 regional banks as part of the preparation for the central bank's policymaking sessions.</br></br>Many financial analysts expect Fed policymakers to make no change in short-term interest rates when they meet next, on Dec. 16. In addition to the current lack of inflation pressure, forecasters predict that a rising trade deficit with the troubled Asian nations will trim half a percentage point or more off U.S. economic growth next year, probably shaving it to about 2 percent to 2.5 percent. That ought to reduce concerns of Fed officials that the economy might overheat in 1998, analysts said.</br></br>Surveyors for the Boston, Philadelphia, Cleveland, Dallas and San Francisco Federal Reserve banks all found that demand for U.S. goods by Asian importers is weakening.