US Fed says their economy 'downshifted'

<p>Kia ora, </p><p>Welcome to Thursday's Economy Watch where we follow the economic events and trends that affect New Zealand.</p><p>I'm David Chaston and this is the International edition from Interest.co.nz.</p><p>Today we lead with news American economic data is softening now, but there is a sense the Chinese economy may have bottomed out.</p><p>In the US, the number <a href="https://www.bls.gov/news.release/jolts.nr0.htm" target="_blank"><strong>job openings</strong></a> in the rose by +749,000 to a record high 10.9 mln in July. That was well above analyst expectations of 10 mln and it reinforces the notion that firms face significant labour market constraints. Those jobless don't seem to have either the skills or qualifications for what the post-pandemic economy needs. The largest shortages are in health care, finance, and hospitality. </p><p>The US Fed released its <a href="https://www.federalreserve.gov/monetarypolicy/files/BeigeBook_20210908.pdf" target="_blank"><strong>September Beige Book</strong></a> review this morning, showing a US economy that "downshifted" in July and August, mainly due to sharp cutbacks in the hospitality sector as the delta virus raised the risks of going out. The noted that growth also slowed because of supply disruptions and labour shortages in manufacturing. Car manufacturing and house construction were noted as suffering. "Inflation was reported to be steady at an elevated pace, as half of the Districts characterized the pace of price increases as strong, while half described it as moderate."</p><p><a href="https://tradingeconomics.com/united-states/total-vehicle-sales" target="_blank"><strong>US vehicle sales</strong></a> fell to just a 13 mln annual rate in August due to those chip supply shortages, and this is the lowest level since the GFC (ignoring the 2020 pandemic freeze).</p><p>US <a href="https://www.federalreserve.gov/releases/g19/current/default.htm" target="_blank"><strong>consumer credit growth</strong></a> came in less than expected in July, and much less than f