Fed Beige Book Shows Slight-to-Moderate Growth

The monthly report, which attempts to catch a glimpse of the economy based on conversations with business contacts across all of the Fed’s 12 districts, revealed that economic activity grew at a slight-to-moderate pace in March and early April. A few areas even showed some strengthening in economic growth.
James Hyerczyk
Economic Growth

The U.S. Federal Reserve’s Beige Book, released Wednesday afternoon, showed that labor markets remained tight across the nation but businesses struggled to find skilled workers while wages only grew modestly.

The Beige Book data will provide Fed members with some information about the strength of the economy ahead of next week’s two day Federal Open Market Committee meeting. Nonetheless, policymakers are still expected to vote to keep interest rates unchanged.

General Overview

The monthly report, which attempts to catch a glimpse of the economy based on conversations with business contacts across all of the Fed’s 12 districts, revealed that economic activity grew at a slight-to-moderate pace in March and early April. A few areas even showed some strengthening in economic growth.

The details revealed that prices have risen modestly since the last Beige Book reporting. The Fed cited tariffs, freight costs and rising wages as a few of the key reasons. The central bank also said that consumer spending was mixed but suggested sluggish sales for both general retailers and auto dealers.

Wages and Jobs

The Beige Book also showed that wages grew modestly in most districts for both skilled and unskilled workers, with only three reporting slight growth in workers’ pay, the Fed said.

Businesses in most Fed districts reported shortages of skilled workers, mainly in manufacturing and construction, but also in technical and professional roles. Companies have responded to the tight labor market by boosting bonuses and benefits packages, along with raising wages moderately, according to the report.

The Fed also noted that employment increases were most highly concentrated in highly-skilled jobs.

Manufacturing Uncertainty

The Beige Book said as far as the manufacturing sector is concerned, contacts in many districts reported that trade-related uncertainty was weighing on activity.

Farming Sector Could Face Problems

The Beige Book showed several Fed districts said flooding and severe weather in the Midwest was affecting agricultural production. The Kansas City Fed reported that recent blizzards and flooding could weigh on the farming sector in the coming months, as it had resulted in damaged infrastructure and losses of cattle and crops.

Little Impact from Federal Government Shutdown

The Fed said the impact of the 35-day U.S. government shutdown that began in late December appeared muted. The Richmond Fed reported a few federal contractors saw business starting to return to normal and the San Francisco Fed saw higher-than-expected retail sales once the government reopened.

 

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