Although economic conditions deteriorated during the summer in the Southeast region of the country, an "outright decline" is not assured, according to the Atlanta Fed.
Regional growth was "very modest" in late June and July and expectations declined. "The region is clearly not performing as well as it did earlier in the year, and we detected little that leads us to believe an improvement is imminent," according to Atlanta Fed research department vice president Mike Chriszt and senior economic research analyst Shalini Patel in the bank's publication Southeastern Insights. "That said, we also cannot conclude that the recent deceleration in regional economic activity will turn into an outright decline."
The authors last reported a "modestly positive" mood in late spring. In late July, "the mood had shifted. Regional economic data revealed slowing economic activity, and information gathered from our business contacts confirmed that current economic activity had slowed and the outlook had deteriorated for the second half of the year. The cautious optimism we detected in the early summer has given way to a degree of resignation that economic activity may not improve much in the months ahead. The resulting low level of expected growth is resulting in more modest hiring and capital expenditure plans, according to our contacts. In short, cautious optimism has become even more cautious."
But, contacts did not talks about major workforce reductions, and most said they expect demand "will not grow rapidly in the near term." However, Chriszt and Patel said a majority of those they spoke to believe risks have balanced out and are no longer "weighted to the downside."
Long-term expectations were steady, according to the authors, with improvement in activity expected next year.
"Simply said, the region appears to be in a sluggish period in an already slow-growth environment," they said. "While this makes the economy more susceptible to event risk, very few of our contacts are actually anticipating an outright decline in economic activity."