Beige Book: Economic Activity Expanding at a Slower Pace

Economic activity expanded across most of the twelve Federal Reserve Districts, according to the July 2016 edition of the Federal Reserve’s Beige Book. Most Districts reported a modest pace of growth, while some reported a moderate or steady pace.

Banking conditions were mixed. Overall loan demand increased; however, the pace of increase varied (slow in Cleveland but strong in St. Louis). Loan demand for commercial and industrial loans was mixed, while consumer lending was unchanged or improved across Districts. Lending standards were unchanged in New York, Cleveland, and Kansas City. Dallas reported relaxed standards for all sectors except energy.

Agricultural activity was “mixed but improving on average,” according to the report. Districts reported that farmers were able to lock-in higher crop prices for the fall harvest, in addition to benefitting from more favorable growing conditions.

Labor conditions improved at a modest rate, with growth ranging from little changed in Cleveland, to moderate in New York. District contacts continued to report strong demand for skilled labor and difficulty filling positions in technical fields. Wage pressures remained modest to moderate, with the strongest pressures linked to skilled workers and difficult-to-fill positions.

Consumer spending remained positive but has begun to show signs of softening. Retail sales activity was mixed across Districts although the outlook among retailers was optimistic in Boston, Philadelphia and Kansas City. Contacts in Atlanta and St. Louis expect sales to be flat or slightly higher in the coming months.

Read the Federal Reserve’s Beige Book.