Despite some growth in US business activity from early April to mid-May 2024, many American companies are pessimistic. This is alarming. The Federal Reserve tries to clear up the situation as it fears the strengthening of negative sentiment.
A Fed survey revealed that this pessimism is tied to weakening consumer demand and climbing inflation. The main issue for many companies is a slump in consumer spending. Additional risks, such as the ongoing conflict in the Middle East and global geopolitical tensions, have added to their concerns.
Consumer spending has either remained flat or slightly increased. Current reports show that many consumers are cutting back on their expenses. Meanwhile, central banks are trying to determine how long they need to keep interest rates high.
This survey is published every six weeks, and the US central bank closely monitors price pressures and economic trends. At the next meeting on June 11–12, the Federal Reserve will discuss key economic issues. The likelihood of a new rate hike is low, as officials need to see consistent positive data on inflation. Experts believe that this positive trend must continue for several months before considering a rate cut.