The consolidated economic report from the 12 Federal Reserve Districts (Beige Book) stated “the pace of expansion equally split between modest and moderate“. The previous report stated “the economy expanded at a modest to moderate pace from early January through mid-February“.
Analyst Opinion of this month’s Beige Book
Seems like the rate of growth is unchanged. Still the Fed is not saying the economy is strong.
Please see the end of this post for words the Federal Reserve uses when the economy is entering a recession. The Beige Book completely missed the 2001 recession, and was late in seeing the Great Recession.
This report is based on information collected on or before 10 April 2017. The summary for this release:
Overall Economic Activity
Economic activity increased in each of the twelve Federal Reserve Districts between mid-February and the end of March, with the pace of expansion equally split between modest and moderate. In addition, the pickup was evident to varying degrees across economic sectors. Manufacturing continued to expand at a modest to moderate pace, although growth in freight shipments slowed slightly. Consumer spending varied as reports of stronger light vehicle sales were accompanied by somewhat softer readings in non-auto retail spending. Tourism and travel activity generally picked up. On balance, reports suggested that residential construction growth accelerated somewhat even as growth in home sales slowed, in part due to a lack of inventory. Nonresidential construction remained strong, but became more mixed in some regions; leasing activity generally improved at a more modest pace. More than half of the reports suggested that loan volumes increased, while only one said they were down modestly. Non-financial services generally continued to expand steadily. Energy-related businesses noted improved conditions while agricultural conditions varied.Employment and Wages
Employment expanded across the nation and increases ranged from modest to moderate during this period. Labor markets remained tight, and employers in most Districts had more difficulty filling low-skilled positions, although labor demand was stronger for higher skilled workers. Modest wage increases broadened, and reports noted bigger increases for workers with skills that are in short supply. A larger number of firms mentioned higher turnover rates and more difficulty retaining workers. A couple of Districts reported that worker shortages and increased labor costs were restraining growth in some sectors, including manufacturing, transportation, and construction. Businesses generally expected labor demand to increase moderately in the next six months, and looked for modest wage growth.Prices
On balance, prices rose modestly since the previous report. Input prices generally increased at a modest rate and outpaced gains in selling prices, which rose only slightly. Price increases were noted for some building materials, such as lumber and concrete, whereas metal prices remained fairly stable. Retail prices rose moderately, on the whole. Energy prices were flat to slightly lower. Reports on agriculture prices varied, with increases in cotton, peanuts, chickens, and hogs, and declines for corn and wheat. Home prices generally moved slightly higher. Businesses mostly expected mild to moderate price growth to persist in the next several months.Highlights by Federal Reserve District
Boston
Overall activity expanded and most business contacts reported modest to moderate increases in revenues. Firms continued to cite difficulty filling selected positions and planned small wage increases, if any. Prices were said to be stable or up slightly. Respondents said their outlook remained positive.New York
Economic activity has expanded modestly. Labor markets remained tight and wages continued to grow moderately. Input cost pressures have remained fairly widespread, while selling prices have continued to increase at a modest pace. Housing markets have improved somewhat except at the high end, while commercial real estate markets have been steady to slacker.Philadelphia
Overall, economic activity continued to rise modestly in the Third District with continued moderate growth among manufacturers and homebuilders. However, activity was essentially flat in several other sectors, including consumer spending. Many contacts remained cautiously optimistic. In general, employment, wages, and prices continued to rise at a modest pace.Cleveland
The economy expanded at a moderate pace, as improved consumer and business expectations have boosted activity levels and hiring for some businesses. Conditions in manufacturing improved, but some manufacturers remain notably cautious. Housing market conditions have cooled slightly but remain above year-ago levels. Pressures from input prices continued to rise.Richmond
Economic activity increased at a slightly faster, but still modest pace. Warmer weather brought out more tourists, and manufacturing continued to rebound amidst stronger new orders, including from overseas. However, tighter margins cut into manufacturers’ capital spending plans. Labor demand strengthened, but skills shortages constrained output in some industries, notably homebuilding. Wages and prices rose at a slightly faster pace.Atlanta
Economic activity increased modestly. The labor market remained tight with firms noting increased use of training programs. Wage pressures were reported for high demand positions. Retail sales were soft. Manufacturers noted a solid increase in new orders and production. Drought and cold weather impacted agriculture conditions.Chicago
Growth continued at a moderate pace. Employment, wages, and manufacturing production grew at moderate rates, while prices, business spending, and construction and real estate activity increased modestly. Consumer spending was flat, financial conditions were little changed, and lower crop prices put further stress on the agricultural sector.St. Louis
Economic activity has continued to increase at a modest pace. Reports from retail contacts suggest a modest uptick in consumer spending after a slow start to the year. District activity in natural resource extraction also improved modestly from the previous report. February District coal production was 10 percent higher than one year ago.Minneapolis
Ninth District economic activity increased modestly during the reporting period. The heavy construction, manufacturing, energy, and mining sectors saw growth, while commercial real estate activity was steady at strong levels. Consumer spending was down, and a wave of retail closures continued across the District, affecting both large and small stores.Kansas City
Economic activity in the Tenth District increased moderately. Manufacturing activity expanded at a strong pace, and energy activity continued to rebound following several years of decline. Consumer spending rose modestly with the exception of autos which fell moderately. Agricultural conditions remained generally weak with some improvement in cattle and soybean markets. Employment was modestly higher, and prices rose slightly.Dallas
Economic activity grew moderately in the Eleventh District. Retail sales growth accelerated slightly, and the nonfinancial services sector continued to expand. The energy sector picked up notably, and a rebound was seen in fabricated metals manufacturing–a segment with strong ties to oil and gas. Employment continued to rise, and prices generally increased, except in retail. Overall outlooks generally improved.San Francisco
Economic activity in the Twelfth District continued to expand at a moderate pace. The labor market continued to tighten. Activity in the retail sector improved moderately, and sales of business services remained strong. Conditions in the agriculture sector expanded modestly, while activity in the manufacturing sector was stable. Contacts reported strong activity in the housing market and moderate growth in overall lending activity.
Fed’s Words When Economy is entering a Recession
For the recession starting December 2007, 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
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