The consolidated economic report from the 12 Federal Reserve Districts (Beige Book) stated: “Economic activity expanded at a modest pace overall from April through mid-May, a slight improvement over the previous period“. The previous report stated: “Economic activity expanded at a slight-to-moderate pace in March and early April“.
Analyst Opinion of this month’s Beige Book
This month the Beige Book narrative states conditions are better this month. After reading the narrative, one gets the feeling of a little change in growth and a slow economy. Note the following statement from the Federal Reserve:
This document summarizes comments received from contacts outside the Federal Reserve System and is not a commentary on the views of Federal Reserve officials.
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 was prepared at the Federal Reserve Bank of Minneapolis based on information collected on or before May 24, 2019.
Economic activity expanded at a modest pace overall from April through mid-May, a slight improvement over the previous period. Almost all Districts reported some growth, and a few saw moderate gains in activity. Manufacturing reports were generally positive, but some Districts noted signs of slowing activity and a more uncertain outlook among contacts. Residential construction and real estate both showed overall growth, but both sectors saw wide variation in sentiment across Districts. Reports on consumer spending were generally positive but tempered. Tourism activity was stronger, especially in the Southeast, but vehicle sales were lower, according to reporting Districts. Loan demand was mixed but indicated growth. Agricultural conditions remained weak overall, but a few Districts reported some improvements. The outlook for the coming months was solidly positive but modest, with little variation among reporting Districts.
Employment and Wages
Employment continued to increase nationwide, with most Districts reporting modest or moderate job growth and others reporting slight growth, an assessment similar to the previous reporting period. Solid hiring demand was noted for retail, business services, technical, manufacturing, and construction jobs and by staffing agencies in general. However, stronger employment growth continued to be constrained by tight labor markets, with Districts citing shortages of both high- and low-skill workers. Competition for workers reportedly applied some wage pressures across a wide range of occupations and induced improvements in benefits to attract more workers and to improve retention of existing employees, according to several Districts. However, overall wage pressures remained relatively subdued given low unemployment rates; a majority of Districts reported modest or moderate wage growth.Prices
Overall prices continued to increase at a modest pace in most Districts since the previous report. While several Districts noted faster growth in input prices than in final selling prices, firms generally reported input cost increases in the modest-to-moderate range. Contacts in several Districts reported higher freight prices. Reports from manufacturers on input prices were mixed, with some Districts citing an easing in steel and other metals prices, while contacts in others noted that raw materials prices remained elevated. Construction materials prices, including those for lumber, also eased in several Districts. Retailers generally reported flat to slightly increased selling prices. Despite increases for certain agricultural commodities, prices remained low relative to historical levels.Highlights by Federal Reserve District
Boston
Economic activity expanded at a modest-to-moderate pace in most sectors, although a majority of manufacturers saw declines. Several staffing firms suggested that a shift in the balance of requests from direct hires toward longer contracts for temps indicated an increase in uncertainty among their clients. Most business contacts remained at least guardedly optimistic about the outlook.New York
Regional economic activity expanded at a moderate pace in the latest reporting period. Despite persistently tight labor markets, wage growth was subdued, as was inflation generally. Consumer spending and tourism grew modestly. There was a notable expansion in new commercial construction and a modest firming in the office market. Housing markets also firmed somewhat. Banks reported a fairly broad-based pickup in loan demand.Philadelphia
On balance, business activity accelerated further to a modest pace of growth during the current Beige Book period following slight growth in the prior period. Trade uncertainty has delayed business investment, and tight labor markets have constrained expansion and spurred wage hikes. Still, inflation remained modest, and the firms remained positive about the six-month outlook.Cleveland
Economic activity grew modestly overall. Service-focused industries grew the fastest, both in terms of demand and in terms of employment. Nonauto consumer spending increased. Manufacturing declined slightly. Employment rose modestly. Wages increased moderately overall and grew faster in white-collar than blue-collar industries. Price inflation decelerated.Richmond
On balance, the regional economy grew modestly in recent weeks. Manufacturers saw a decline in shipments and new orders, while trucking firms said that business was below normal. Meanwhile, ports saw strong import volumes, tourism remained high, and real estate sales and leasing picked up modestly. Labor markets tightened, and difficulty finding workers constrained growth for some retail and nonfinancial services firms.Atlanta
Economic activity grew at a modest pace. The labor market continued to be described as tight. On balance, wages held steady but rose for select positions. Retail sales were largely unchanged since the previous report. The pace of home sales picked up. Manufacturers noted increases in new orders and production. Bankers noted stable activity.Chicago
Economic activity increased slightly on balance. Employment increased modestly; consumer spending, business spending, and construction and real estate increased slightly; and manufacturing was little changed. Wages and prices rose modestly, and lending picked up slightly. Farmers continued to be challenged by poor weather and low crop prices.St. Louis
Economic conditions were generally unchanged from the previous report. Contacts in most sectors reported slightly positive to no growth. However, contacts in banking, real estate, and agriculture noted slight to moderate declines. Overall, contacts’ economic outlook for the reminder of the year remains slightly optimistic.Minneapolis
Ninth District economic activity grew slightly, with several sectors seeing mixed or flat growth, including commercial construction and real estate. Labor demand remained healthy, but signs of softness were apparent. Residential construction and real estate remained soft, but manufacturers were upbeat about near-term expectations. A wet spring has threatened the planting season for already-struggling agricultural producers.Kansas City
Economic activity continued to expand at a slight pace in April and early May. Home sales increased strongly, and consumer spending rose slightly, driven by moderate gains in the retail sector. In addition, manufacturing, wholesale trade, transportation, and professional and high-tech activity rose modestly. However, energy activity fell slightly, and agricultural credit conditions and farm income weakened.Dallas
Economic activity expanded moderately, although there were scattered signs of a deceleration in growth in early May. Home sales rose, and loan volumes continued to increase. Hiring continued at a moderate pace, and wage pressures remained elevated. Outlooks were generally less positive than during the prior reporting period, with tariff and trade negotiations driving up uncertainty.San Francisco
Economic activity in the Twelfth District continued to expand at a moderate pace. Labor market conditions remained tight, and price inflation was unchanged on balance. Sales of retail goods increased modestly, and activity in the consumer and business services sectors increased moderately. Conditions in the agriculture and manufacturing sectors improved modestly. Activity in residential real estate markets expanded moderately, and commercial activity was steady. Lending activity increased slightly.
Source
https://www.federalreserve.gov/monetarypolicy/beigebook201906.htm
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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