Fed Beige Book: Modest Pace of Growth Continues for Most Districts


The latest release of the Federal Reserve’s Beige Book indicates that economic activity expanded at a “modest to moderate pace” in nearly all 12 Fed Districts. The sole exception was the Richmond District, and even there local economic activity was described as being at worst flat versus the previous reporting period. Participants noted a solid increase in consumer spending activity in most districts, with New York and Dallas going as far as calling sales “brisk” and “robust”. Improved levels of consumer confidence were credited as a key reason for lifting holiday retail sales compared to last year. Tourist activity was generally characterized as strong in most districts, although areas with large ski destinations noted some weakness in travel bookings due to unseasonably warm weather during the holiday season.

In terms of manufacturing activity, the sector continued to expand in all but the Kansas City District. The strongest readings came out of industries such as heavy equipment and steel, due to healthy demand growth from energy, agriculture, and auto manufacturing. Housing-related manufacturers saw demand remain weak, while high-tech equipment producers experienced uneven demand conditions as stronger computer and peripheral equipment orders were offset by declining semiconductor sales to Asia. For the financial sector, “reports from financial institutions generally indicated a slight uptick in loan demand by businesses, along with improvements in overall credit quality.”

The residential real estate market continued to struggle by most accounts, but continued improvements in the multifamily/rental market are providing a boost in several areas. According to the report:

Activity in residential real estate markets largely held steady at very low levels, with the exception of further increases in the construction of multifamily residences…Prices were largely stable on a short-term basis in most areas but in many instances were below their levels from twelve months earlier. Extensive inventories of distressed properties were reported to be a source of price restraint in the Boston, Richmond, Chicago, and San Francisco Districts. Construction of single-family homes remained at depressed levels in most areas and fell further in some…. In contrast to the soft market for single-family residences, the market for rental units tightened in some areas…and construction of multifamily residences rose in the Boston, Philadelphia, Chicago, Kansas City, and Dallas Districts.

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