WASHINGTON - The Federal Reserve's latest report of economic conditions Wednesday found all 12 regional Fed districts reporting their regional economies cruising along at a modest or moderate pace, with businesses remaining optimistic on growth in the face of continued policy uncertainty.
"Economic activity increased in each of the twelve Federal Reserve Districts between mid-February and the end of March, with the pace of expansion equally split between modest and moderate," the Current Economic Conditions report known as the Beige Book said. The report will be presented at the Federal Open Market Committee meeting May 2-3.
Activity in the midwest, the San Francisco district and parts of the Boston region continued to grow at a moderate pace, the report said, while the rest of the country saw more modest growth.
Across the country, businesses stayed generally optimistic on the outlook for the rest of the year, though uncertainty on trade policy shifts and tax reform colored responses.
Manufacturers in the Dallas district noted "considerable policy uncertainty, especially regarding any changes that would impact trade with Mexico." Producers in Boston said they hoped there would be some resolution on the proposal to implement a border adjustment tax, even if its effects might be "mixed."
Some reported increasing their capital spending budgets, allocating money for new equipment and for maintenance that had been put off. But others said tighter margins are cutting into their spending plans.
Consumer spending "varied" as reports of stronger light vehicle sales were accompanied by "somewhat softer readings" in non-auto retail spending.
Restaurants in the Boston area said expectations of a reduction in the number of visas to be issued to foreign workers as well as limited ability to raise prices "augmented uncertainty about the outlook, acting as a check on their plans for expansion."
Meanwhile, labor markets remained tight as "modest wage increases broadened" across the country. Businesses reported having a tougher time filling both low-skilled and high-skilled positions and said they expected labor demand to "increase modestly" in the next six months, accompanied by modest wage growth.
At the same time, businesses said they mostly expected "mild to moderate price growth to persist in the next several months." Input prices increased at a modest rate but still faster than selling prices. Energy prices were flat to lower and home prices generally moved slightly higher.
The Beige Book information was collected up until April 10 by the Richmond Fed.
