Beige Book: General Economic Improvement


The Federal Reserve published its latest Beige Book this week. The report provides a summary of economic activity and conditions, collected through interviewers with key market contacts in the Fed’s districts.

The April Beige Book found that improvements in economic activity in most districts was just “moderate” but “widespread across sectors.”

Overall, the report’s findings concerning tight business lending conditions and only moderate expansion of economic activity do not suggest widespread gains in employment will be realized in the short-run.

With respect to business sectors, manufacturing stood out with significant growth and some hiring across most areas of the nation. Retailers reported slight gains across the country (exceptions being reported by the Boston and Richmond Fed banks). 

Most district banks reported gains in hiring, but wage pressures remained weak. Commodity price increases appear to be putting pressure on businesses to raise prices, with both the costs of energy and goods contributing. Nonetheless, businesses reported limited ability to raise prices to pass along increases in costs, particularly in the construction and retail sectors.

For residential real estate, the Beige Book reported the following:

Real estate markets for single family homes for the most part either were little changed from low levels or continued to weaken across all Districts.

Residential construction was described by Chicago as subdued and the spring building season is likely to be slower than previously anticipated. Market activity was still declining in the St. Louis and Minneapolis Districts, while activity in the New York, Cleveland, Kansas City, Dallas, and San Francisco Districts remained weak.

Atlanta characterized the market as mixed, with Florida brokers providing most of the signs of improvement. Both Philadelphia and Atlanta noted that brokers expected the market to improve, and builders in the Cleveland District were more optimistic than in the past several months.

A few Districts found pockets of improvement. For example, Philadelphia reported that agents were seeing a pickup in inquiries, showings, and traffic, although there was little increase in sales or construction. Boston noted higher activity in just the last few weeks, due in part to improved weather, and Richmond said that the market for lower-priced homes improved.

The multifamily markets strengthened in several Districts, including Chicago, Dallas, Minneapolis, and San Francisco, both in terms of leasing and construction activity.

Consistent with survey data of home builders who report overly restrictive AD&C lending conditions for markets where housing demand is strengthening, district banks continue to report tight business and household lending environments. Several districts reported tightening or unchanged lending requirements and intense competition for quality loans.

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