Econintersect: The consolidated economic report from the 12 Federal Reserve Districts (Beige Book) characterizes economic activity that “economic activity increased in most regions of the country since the previous report“. The previous report said “economic conditions continued to expand from January to early February“. The key words again this month did not indicate the rate of expansion was better or worse than the previous report.
This report showed growth was far from uniform across the country. Please see the end of this post for words the Federal Reserve uses when the economy is entering a recession.
This report is based on information collected on or before 07 April 2014. The summary for the 16 April 2014 release reads as follows:
Reports from the twelve Federal Reserve Districts suggest economic activity increased in most regions of the country since the previous report. The expansion was characterized as modest or moderate by the Boston, Philadelphia, Richmond, Atlanta, Minneapolis, Kansas City, Dallas, and San Francisco Districts. Chicago reported that economic growth had picked up, and New York and Philadelphia indicated that business activity had rebounded from weather-related slowdowns earlier in the year. The Cleveland and St. Louis Districts both reported a decline in economic activity.
Consumer spending increased in most Districts, as weather conditions improved and foot traffic returned. Auto sales were up in the New York, Philadelphia, Richmond, Atlanta, Chicago, Minneapolis, and San Francisco Districts, but they were little changed from a year earlier in Kansas City and Cleveland. In addition, assessments of tourism were generally positive, particularly for the Districts of Philadelphia, Richmond, and Minneapolis, where ski resorts had record seasons. Summer bookings were also solid in several Districts. Activity was mixed at non-financial services firms, with the Boston, Philadelphia, Minneapolis, and Kansas City Districts reporting increased demand. In the Boston District, for example, advertising and consulting were strong. The Richmond District indicated that revenues at non-retail services firms were flat, and St. Louis said firms’ planned activity declined on net.
The transportation sector generally strengthened in recent weeks, with higher port volumes and increased trucking. Even in districts where transportation was soft, the outlook was optimistic.
Manufacturing improved in most Districts. Several Districts reported that the impact of winter weather was less severe than earlier this year. Chicago and Minneapolis saw moderate growth, while manufacturing grew at a steady pace in New York, Atlanta, St. Louis, and Dallas. San Francisco noted that manufacturing appeared to gain some momentum. Other Districts noted mild growth, except Richmond, where manufacturing activity was mixed. Demand for food production declined in the Boston, Richmond, and Dallas Districts; however the drop was primarily weather related. Steel production picked up in several districts.
Reports on residential housing markets varied. However, across most Districts, home prices rose modestly and inventory levels remained low. Residential construction increased in several Districts; only Cleveland, St. Louis, and Minneapolis reported a decrease. Commercial construction also strengthened, with the exception of Cleveland, which reported a mild decline. Commercial leasing activity generally advanced at a modest pace. Industrial markets showed signs of tightening in downstate New York and northern New Jersey.
Loan demand strengthened since the previous Beige Book. Credit quality improved in the Philadelphia, Cleveland, Richmond, and Kansas City Districts. New York and Dallas reported especially strong increases. New York, Philadelphia, Cleveland, and Richmond cited the inclement weather as a factor reducing home sales and therefore mortgage borrowing. Commercial loan volumes grew in each of the Districts reporting on banking except St. Louis, where lending declined marginally.
Agricultural reports were mixed, as weather disruptions delayed crop plantings and shipments of commodities. A pig virus adversely affected hog farming in the Richmond, Chicago, Kansas City, and San Francisco Districts. Prices of beef and pork rose. In the energy industry, oil and natural gas production increased, while coal output continued to decline.
Labor market conditions were mixed but generally positive. The New York, Cleveland, Richmond, Chicago, Kansas City, and Dallas Districts reported difficulty finding skilled workers.
In most Districts, wage pressures were contained or minimal. The New York District reported scattered wage pressures and Cleveland reported that wage pressures were contained. However, there were several reports of upward wage pressures in the Dallas District.
Prices were generally stable or slightly higher. The New York District described price pressures as subdued in manufacturing and steady in the service sector. In Philadelphia, manufacturing prices paid and received edged up; in Richmond, prices of raw materials and finished goods rose more slowly since the previous Beige Book. Some districts reported higher prices for construction inputs and livestock. In Cleveland, concrete, drywall, and hardwood prices rose, while in the Kansas City District, drywall and roofing prices increased and were expected to rise further.
Click the “source” hyperlink below to read the full report.
Fed’s Words When Economy is entering a Recession
For the December 2007 recession, here is the lead up summary words from the Beige Books:
- 28Nov2007 – “expanding”
- 16Jan2008 – “increasing moderately”
- 05Mar2008 – “growth slowed”
- 16Apr2008 – “weakened”
For the March 2001 recession which ended in November 2001, here are the Beige Book summary words:
- 17Jan2001 – “economic growth slowed”
- 07Mar2001 – “sluggish to modest economic growth”
- 02May2001 – “slow pace of economic activity”
- 13Jun2001 – “little changed or decelerating”
- 08Aug2001 – “slow growth or lateral movement”
- 19Sep2001 – “sluggish”
- 24Oct2001 – “weak economic activity”
- 28Nov2001 – “remained soft”
- 16Jan2002 – “remained weak”
Source: Federal Reserve