Federal Reserve Beige Book Shows Economy Continues To Expand

According to the latest Beige Book, the economy continues to expand while inflation is subdued-but there are concerns.

Reports from the twelve Federal Reserve Districts generally described economic growth as modest to moderate similar to that noted in the previous Beige Book. Moderate growth was reported by the Cleveland, Chicago, St. Louis, Minneapolis, Dallas, and San Francisco Districts, while modest growth was reported by the New York, Philadelphia, Richmond, Atlanta, and Kansas City Districts. In the Boston District, reports from business contacts painted a mixed picture of economic conditions. In addition, several Districts noted that contacts were generally optimistic about future activity.

Most Districts reported overall growth in consumer spending that ranged from slight to moderate, at a pace that was often similar to that reported in the previous Beige Book. However, general merchandise retailers in New York noted that sales were weaker on balance since the previous report. Several District reports indicated that retailers were relatively optimistic about the remainder of the year. 

Manufacturing activity increased in most Districts. Residential construction and real estate activity were mixed.

Employment continued to expand at about the same pace as that reported in the previous Beige Book. Most Districts reported that some employers had difficulty finding qualified workers for certain positions. A number of Districts characterized overall wage growth as modest, but reported upward wage pressures for particular industries and occupations, such as skilled labor in construction and manufacturing.

Price pressures remained subdued, with Districts reporting little to no change in price levels or modest increases. Firms generally reported that input prices were unchanged or up slightly.

Overall, the focus was on slowing inflation and fears that weak growth overseas could hold back the U.S. recovery, have even spurred talk that the U.S. Federal Reserve could dramatically change tack and launch a fresh round of bond-buying stimulus, or quantitative easing-dubbed "QE4." Even though that possibility remains remote, analysts said they believe Fed officials will have to reconsider plans to raise interest rates in the near future.