The Federal Reserve Issues Its Beige Book - February 29, 2012
The Beige Book summation of economic conditions across the United States was issued earlier this afternoon by Federal Reserve Bank of St. Louis, and summarizes comments received from business and other contacts outside the Federal Reserve System.
In essence, the report opines that overall economic activity continued to increase at a modest to moderate pace in January and early February, on average, across the United States. The most notable strength was seen in the Philadelphia and Atlanta Districts, while the New York District noted a somewhat slower pace of expansion. There were no regions affirming a downturn in business activity.
Individually, manufacturing continued to expand at a steady pace across much of the nation, with many districts reporting increases in new orders, shipments, and production. Activity in nonfinancial services, meanwhile, remained stable or increased, while retail sales were noted to have generally risen, which would be consistent with what we are seeing at individual retail chains and smaller units. Further, residential construction activity increased modestly in most Districts, but New York noted steady to slightly softer home sales. Reports on banking conditions were generally positive across most Districts, with lending generally up, save for some slippage in the Richmond and St. Louis Districts. Finally, agricultural conditions varied by District, with some areas noting drought conditions and warm temperatures, while others were helped by recent rainfall.
Also, hiring increased slightly across several Districts, but contacts in a variety of industries said they were facing difficulties finding skilled workers. Wage pressures were generally contained, as one would expect given the sluggish pace of job creation in most regions and locales.
Overall, it was a report with few notable highlights and was certainly not a game changer as far as the first quarter is concerned. In fact, following the upwardly revised fourth-quarter GDP increase of 3.0%, we would expect stateside growth of 2.0%-2.5% in the current three months, with the presumptive modest deceleration in growth being occasioned principally by an expected lessening in inventory accumulation in the current three months.
At the time of this report's issuance, the author did not have positions in any of the companies mentioned.