U.S. economic activity continued at the same plodding pace seen over much of the last two years without any sign of a break higher, according to a summary of economic conditions released Wednesday.
The Beige Book, a collection of anecdotes about the economy published by the Federal Reserve, said the pace of growth picked up in only 2 of its 12 districts —Cleveland and St. Louis. And these two regions had reported slowing growth in the last Beige Book in April.
The remainder of the Fed’s districts reported “moderate” or “modest” growth except Kansas City, where there was a decline in activity.
Things were by no means bad. Consumer spending expanded across almost all districts, with six districts reporting increasingly strong new car sales.
The assessment is likely to keep the Fed on its steady path to end its bond-buying program by the fourth quarter. The central bank will then be faced with the question of when the economy will be strong enough for higher short-term interest rates.
Residential real estate activity was a trouble spot. Home sales were described as “mixed across the country” and the report pointed the finger at low inventories for holding down home sales.According to the report, tourism was another bright spot and manufacturing activity expanded across the country. picking up along the East Coast and around St. Louis and Kansas City. Energy production was another source of strength.
Home prices were still rising and condo and apartment sales were mostly robust. Construction activity was also seen as mixed.
Labor market conditions were seen as generally strengthening, with “steady to stronger” hiring activity across most of the country. Seven districts reported wage increases but mainly for highly skilled workers.
Prices were seen as “mostly steady to up slightly” but higher food prices were reported by five districts and others mentioned high or rising prices for construction materials, energy products, and precious metals.
Lending activity also increased across the country, led in many districts by demand for auto loans. Mortgage lending was only up in three of its districts.
Source: Marketwatch
