On October 23rd local time, the Federal Reserve released its latest National Economic Situation Survey Report (also known as the "Beige Book"). The report shows that since the beginning of September, the overall economic situation in the United States has hardly changed, economic activities in most regions have been sluggish, and the economic weakness continues to emerge.

       The Beige Book is a report compiled based on the latest survey results of the 12 regional reserve banks (i.e. 12 districts) under the Federal Reserve. It is published eight times a year. The last Beige Book was released on September 4.

      The latest Beige Book shows that economic activity in almost all regions remained largely unchanged, with two regions reporting moderate growth and nine reporting flat or slightly declining economic activity. Among the 12 districts under the Federal Reserve, manufacturing activity declined in most regions, more than half reported "slight or moderate" employment growth, prices rose "slightly or moderately" in most regions, and several regions noted a slowdown in wage growth.

      In terms of consumer spending, some regions have noticed changes in consumption structure. Consumers are more sensitive to higher commodity prices and turn to cheaper substitutes. The increase in inventory and weak demand for some commodities are greater than in previous years.

      In addition, some regions said that loan demand growth in most industries was also tepid, mainly because market expectations that interest rates may fall further and the upcoming general election postponed investment plans.

      The Federal Reserve said that the uncertainty of the US election has cooled economic activities across the country, and many businesses and consumers have postponed major decisions until after the election day. According to the "Beige Book" survey, both public consumption and corporate investment and recruitment have been affected to a certain extent. Some respondents said that the uncertainty of the presidential election has brought risks to the overall business environment, and it is expected that business activities and consumer confidence will pick up again after the election.

      Bloomberg economist Eliza Wenger said the latest "Beige Book" once again presented "a weaker picture of the U.S. economy than the hard data." However, the latest assessment of the slowdown in economic growth may ease market concerns that the Federal Reserve may have to pause its interest rate cuts.

      On September 18, the Federal Reserve announced a 50 basis point cut in the target range for the federal funds rate to between 4.75% and 5%. This is the first rate cut by the Federal Reserve since March 2020.

      Recently, a number of Federal Reserve data reflect that the uncertainty of the US economy is still high. Data released by the US Department of Labor on the 4th showed that the US unemployment rate fell to 4.1% in September this year, and the number of new jobs in the non-agricultural sector was 254,000, both better than expected. Data released by the Department of Labor on the 10th showed that the US Consumer Price Index (CPI) in September this year increased by 0.2% month-on-month, the same as the previous two months, but higher than the market's general expectation of an increase of 0.1%.

      Analysts believe that the relatively stable performance of the job market may help the Federal Reserve remain cautious when adjusting its interest rate policy. However, against the backdrop of a cooling job market, the unexpected increase in the U.S. inflation rate in September will undoubtedly pose a challenge to the Fed's next monetary policy decision.

      The Federal Reserve will hold its next monetary policy meeting on November 6-7. According to a Federal Reserve tracking data released by the Chicago Mercantile Exchange, the market now believes that the probability of the Federal Reserve cutting interest rates by 25 basis points at the November meeting has risen to 91.9%.