Fed Beige Book: Economic Activity Continues to Expand

Anecdotal evidence collected by the Federal Reserve Board’s Summary of Current Conditions, commonly known as the Beige Book, continues to indicate “moderate” economic growth. In its most recent iteration, 10 of the 12 Federal Reserve Districts reported that economic activity in their Districts had expanded at a “moderate” or “modest” pace since the previous Beige Book. The Boston and Chicago Districts described growth in activity as “slow”.

Over the period since the last Beige Book, residential real estate markets strengthened in nearly all Districts. In particular, the Philadelphia District indicated that potential buyers expressed greater confidence, including potential entry-level purchasers that had been increasingly opting to rent up to mid-summer. The Richmond and Atlanta Districts observed multiple offers on many homes.

Meanwhile, residential construction was reported as being higher in 11 of the 12 Federal Reserve Districts. Kansas City indicated that residential construction was “unchanged”. Multi-family construction, in particular, exhibited ongoing strength; however some Districts noted that these builders were still facing difficulty securing financing.

In the banking sector, borrowing standards have loosened somewhat and asset quality continued to improve in most Districts. Earlier analysis of the Fed’s Senior Loan Officer Opinion Survey illustrated the growing optimism of bankers over mortgage quality in 2013. However, some District banks noted that their measures of profit from mortgage lending were declining.

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