Investing.com – Economic activity showed a "slight improvement" during the spring quarter over the previous period, with growth and inflation expanding at a "modest pace," but there were signs of tempered consumer spending growth, a Federal Reserve survey showed.
The central bank’s Beige Book economic report, based on anecdotal information collected by the Fed’s 12 reserve banks on or before May 24, 2019, noted that economic activity expanded at a modest pace overall from April through mid-May, with almost all Districts reporting some growth, while a few saw "moderate" gains in activity.
Consumer spending, the backbone of the U.S. economy, was generally positive but tempered, according to the Fed survey.
On inflation, which has remained well below the Fed's 2% target, the central bank survey highlighted that prices continued to increase at a modest pace in most Districts since the previous report.
The modest pace of inflation comes even as wage growth has continued to increase, with "most Districts reporting modest or moderate job growth and others reporting slight growth," according to the survey.
Areas of the economy like manufacturing, more acute to the escalating U.S.-China trade war, remained "relatively upbeat," with stable backlogs despite uncertainty about trade negotiations and slowing global growth, the survey indicated. "Many noted that there is usually an uptick in activity during the summer months."
Federal Reserve Chairman Jerome Powell on Tuesday said the central bank is willing to take "appropriate" action to sustain economic growth, stoking expectations that a rate cut would be delivered sooner rather than later.
Traders are increasingly pricing in the prospect of a rate cut, according to Investing.com's Fed Rate Monitor Tool, with 57% expecting the central bank to cut rates as soon as July.