Beige Book: Growth moderate; labor markets tight

Published September 12, 2018, 2:08 p.m. EDT

Updated June 01, 2021, 1:44 p.m. EDT

1 Min Read

WASHINGTON — The Federal Reserve's Beige Book noted the economy expanded at a moderate pace for most districts, a small upgrade from the "moderate or modest" growth language in the last Beige Book, but with three districts reporting "below average growth."

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Language on labor markets (still tight) and prices (still modest to moderate) were little changed.

The Marriner S. Eccles Federal Reserve building stands in Washington, D.C., U.S., on Tuesday, Jan. 27, 2015. The Federal Reserve Board joins with the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation in pushing for higher capital requirements for large banks.

Here are the key points from the Beige Book compiled by the Federal Reserve Bank of New York on through August 31, 2018:

The economy expanded at "a moderate pace" nationally, a slight upgrade from the "moderate or modest" characterization seen in the last Beige Book. However, three districts — Philadelphia, St. Louis, and Kansas City — reported "somewhat below average growth." Dallas was again the upside outlier, reporting "relative brisk growth."
Prices of final goods and services were up at a "modest to moderate pace" across most regions, but the Beige Book did note "there were some signs of deceleration." All districts noted widespread input price gains, especially for construction, with tariffs adding to rising input costs that some are trying to pass to consumers. A few noted rising inflation expectations.
The labor market remained tight, with most districts seeing "widespread shortages" for both higher-skilled and lower-skilled workers. Employment grew "modestly or moderately" across most of the country, but half the districts said labor shortages were holding back sales or projects. Wage growth was "modest to moderate," but there was strong wage gains for sectors like construction where labor shortages exist.
Manufacturing grew at a moderate rate, though Richmond saw an activity decline. While businesses overall remained optimistic, most cited concerns about trade tensions and some noted businesses had scaled back or postpone capital spending as a result of the trade uncertainty.
Consumer spending grew modestly and home construction was mixed, but home sales were softer due to reduced demand in some cases and reduced supply in others.

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