Beige Book: Economic Activity Continues Expanding at a Moderate Pace into 2019

Economic activity expanded at a moderate or modest pace across eight of the twelve Federal Reserve Districts, according to the just-released Federal Reserve Beige Book. The report was based on information collected through January 7th.

Retail sales reported a bump in the districts as many experienced higher levels of holiday traffic in comparison to the previous year. Manufacturing expanded in most districts, but growth slowed in manufacturing as well as in the energy sector, tempered by a decline in optimism regarding short term interest rates, declining energy prices, financial market volatility, political uncertainty, and trade.

Employment growth was modest in most Districts. Labor markets once again remained tight, and employers in most Districts continued to report greater difficulty attracting and retaining qualified workers. Businesses responded in a variety of ways, including raising pay and over-staffing. Minneapolis reported that construction firms have begun to turn down contracts due to a shortage of workers.

Modest wage growth was seen in most Districts as upward wage pressures continue to persist. Prices increased at a modest to moderate pace across most Districts. Firms in most districts indicated higher input costs, but it is unclear whether firms can pass on the rising costs to consumers. Rising material and freight prices, along with tariffs are attributed for the higher costs. Several districts reported declining fuel prices and rising home prices. Commercial and industrial space either increased or remained flat. Agricultural commodity prices increased slightly.

Read the full Federal Reserve report.

 

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About Author

Hugo Dante

Hugo Dante is a research associate in the Economic Policy and Research group at the ABA.