Fed struggles to gain traction in battle with spend-happy consumers
By Howard Schneider
DANVILLE, Virginia (Reuters) — The new Caesars (NASDAQ:CZR) casino in Danville, Virginia, is a temporary facility reminiscent of an airplane hangar and with limited food and drink options.
It still saw 400,000 visitors lay out more than $50 million in bets since opening in the middle of May, beating its owners' expectations in another example of U.S. consumer spending that so far refuses to cave in the face of the Federal Reserve's aggressive interest rate hikes.
«It's amazing the amount of demand we've seen so far for sure,» said Chris Albrecht, senior vice president and general manager of Caesars Virginia, noting the current space's «very limited offering» compared to what's planned for the rest of the site that's being developed in the town of about 40,000 people, where tobacco and textiles were once the economic mainstays.
As Fed officials analyze inflation dynamics in the post-pandemic world and look for signs that tighter monetary policy is having the intended effect of slowing the economy, Danville illustrates the confounding puzzle playing out across the U.S.
Despite higher borrowing costs and national chatter about a looming recession, Danville residents are buzzing not just about the arrival of Caesars, which is putting a casino, conference center and hotel at the site of an old textile mill power plant with plans to hire 1,000 people, but also about a steady flow of manufacturing investment and other job growth in the pipeline.
The Fed, which has raised interest rates by 5.25 percentage points since early 2022, has been looking for the U.S. labor market and consumer demand to ebb, something it feels needs to happen for inflation to fall to its targeted 2% level and which will be
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