This past month we have noticed a drop in retail sales as well as declines in homebuilding and permits. The ripple effect has created the first decline in manufacturing output since January. As reported by CNBC, “manufacturing output dipped 0.1% last month after increasing 0.8% in April”. The Federal reserve has aggressively tightened monetary policies to help with the current inflation crisis. The weakness in production indicates a shift that people are spending less on goods and services.
“Manufacturing, which accounts for 12% of the U.S. economy, has been supported by a strong demand for goods… but rising interest rates could make U.S exports more expensive. The U.S. central bank has hiked its policy interest rate by 150 basis points since March”. With the ongoing war in Ukraine and a multitude of supply chain issues, it’s predicted that the economy will continue a downward trend. With factories experiencing order shortages and different manufacturing issues slowing things down for the
first time in a long time, many are alarmed. Economists are keeping a close eye on the continuously changing economy for any more important factors.