Beige Book Reports Economy Still Slowing

The economy “slowed somewhat” recently, with the five eastern Federal Reserve districts reporting “weakening or softening,” Chicago reporting “sluggish” conditions, “and Kansas City noted a moderation in growth,” according to the Fed Beige Book released yesterday.

St. Louis reported stability, San Francisco said its economy showed “little or no growth,” and “Cleveland and Minneapolis reported slight increases in economic activity, while Dallas described growth as steady and moderate.”

Almost all districts said consumer spending was sluggish or slowing, “although tax rebate checks boosted sales for some items.” Tourism was mixed, with gas prices keeping some vacationers closer to home.

There was mixed demand for services, “with strength in the [information technology] and health care industries offsetting some weakness in other service sectors.”

Manufacturing declined in “many districts, although demand for exports remained generally high.”

Residential real estate remained weak.

“All reporting districts characterized overall price pressures as elevated or increasing,” the Fed report said. “Input prices continued to rise, particularly for fuel, other petroleum-based materials, metals, food, and chemicals. Retail price inflation varied across the country, with some districts reporting increases but others noting some stability, at least for the present. Wage pressures were generally limited in most districts, as labor market demand was soft except for highly skilled workers and in the energy sector.”

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