Beige Book: Economy Expanding at Modest Pace

Economic activity expanded across most of the twelve Federal Reserve Districts, according to the August 2016 edition of the Federal Reserve’s Beige Book. Most Districts reported a “modest” or “moderate” pace of growth; however two Districts, Philadelphia and Richmond, reported that economic activity had slowed.

Banking conditions were favorable, as credit demand for businesses and consumers varied but grew overall. Credit quality remained favorable in most districts; however some oil and gas companies reported challenges obtaining credit. Contacts in the Atlanta Districts noted a drop in delinquencies and charge-offs.

Consumer spending remained positive, but showed little change since the last report. Inventory levels were in line with retailer expectations in several Districts, but higher than desired in the Chicago District. The pace of auto sales declined, but remained high in general. Only the Dallas District reported strong growth in sales.

Agricultural producers faced mixed conditions as lower prices pushed down revenues despite growth in volumes. In the Chicago District, the potential for a record national harvest pushed incomes down. In contrast, Dallas District dairy farmers benefitted from a price rally over the last six weeks.

Employment conditions expanded at a moderate pace, as the labor market remained tight in a handful of Districts. Contacts in Boston reported an unusually high number of job openings, while the Richmond District noted increased turnover for entry-level positions. Businesses in many Districts continued to report having trouble filling vacancies for high-skilled positions.

Read the full Federal Reserve report.