American media: Warning of economic slowdown in the United States has emerged | manufacturing | economy
Production operations of American workers
According to the Business Insider website on August 28th, the Dallas Federal Reserve's August manufacturing survey of Texas showed that the Federal Reserve's aggressive interest rate hikes have had a negative impact on the US economy, and warning signals of economic slowdown have emerged. The interviewed business owners criticized that rising interest rates are suffocating the entire industry.
The survey found that the production index, which measures factory activity in the state, fell another 6 points to -11.2 in August, the lowest level since May 2020. The new order index has also shown weakness, and it has been in a negative state for over a year. The report shows that in August, people's perception of the broader business situation continued to deteriorate, with the overall business activity index remaining negative. The uncertainty of the outlook continues to intensify, with the corresponding index falling 8 points in August, reaching its lowest level in over two years.
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Most respondents gave negative feedback on the Federal Reserve's aggressive rate hikes. A respondent from the computer and electronics manufacturing industry stated that high interest rates are affecting industry in an unprecedented way, and due to a significant slowdown in production spending, interest rates have had a restraining effect on economic growth. It is now time to stop raising interest rates. Other peers have also stated that manufacturers have seen customers reduce or cancel orders for the first time in the wave of interest rate hikes, and this trend is expected to continue for several months. At that time, orders will suddenly come to a halt, and overall sales will decrease by 51% year-on-year. In addition, respondents from the food processing, machinery manufacturing, and transportation equipment manufacturing industries in Texas also stated that "interest rates are stifling our industry.".
Since the spring of 2022, the Federal Reserve has raised interest rates from near zero to over 5% through 11 rate hikes, in order to achieve its annual goal of reducing inflation to 2%. However, as borrowing costs rise and household and business spending levels in the United States decrease, the US economy is being dragged down, with GDP growth rate dropping to only 1.1% in the first quarter of this year. It remains to be seen whether Federal Reserve Chairman Powell is listening to these concerns, according to US media. Powell stated on the 25th that curbing inflation remains the top priority that needs to be addressed, and the Federal Reserve may need to further raise interest rates.