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The so-called Beige Book, a summary of economic activity in the United States, which is compiled by businesses and economists across the country for the Federal Reserve, indicated that the nation's business upturn continued to improve at a modest-to-moderate pace from mid-February through the end of March.

The Federal Reserve noted that aggregate business activity expanded in each of its 12 Districts, although rising energy costs, principally for gasoline, were crimping some of this economic strength. A better manufacturing sector, increases in demand for professional business services, positive consumer spending, growth in tourism, and finally a pickup in residential housing activity contributed to the overall measured economic improvement.

Meantime, several of the 12 Districts noted rising concerns about increasing petroleum prices, which is inflating the transportation bill being paid by consumers. In general, however, the report cited few inflationary concerns beyond energy, which is realistic, as wage costs remain under control in almost all industries and capacity utilization levels are still well below where they might invite a rise in pricing pressures.

The Beige Book will now be used for discussions at the Federal Reserve's next Federal Open Market Committee meeting, which is set for April 24th and 25th. At the last FOMC meeting, in March, the central bank opined that it would likely keep short-term interest-rate targets near zero through 2014; it also did not rule out a third round of bond buying as part of its effort to keep the economy on a forward course. The bank did seem to back away from this last option somewhat in recent weeks, but the lackluster employment report issued last Friday could change the equation ever so slightly in the direction of further easing.

For now, though, with most of the anecdotal evidence pointing to additional economic growth in the months to come, and even to added solid gains in non-farm payrolls, it would be premature to speculate on further monetary easing at this time--especially with interest rates so near historical lows. Indeed, there seems little in this report to suggest any major deviations are ahead with respect to Fed policy. Overall, we believe that the lead bank will continue to emphasize growth over inflation for the time being, as would seem appropriate, given the current economic realities. Further down the road, however, the tide could turn, as we are building up a lot of debt nationally in our desire to keep a new economic slump at bay in this country--especially with Europe either on the brink of a recession or already in such a downturn.

At the time of this writing, the author did not have positions in any of the companies mentioned.