Beige Book Drivel: Slight to Moderate Growth

The Beige Book is produced approximately two weeks before each FOMC rate setting meeting. The next FOMC meeting will be on May 1.

Overall Economic Activity

• Economic activity expanded at a slight-to-moderate pace in March and early April. While most Districts reported that growth continued at a similar pace as the previous report, a few Districts reported some strengthening.
• There was little change in the outlook among contacts in reporting Districts, with those expecting slight-to-modest growth in the months ahead.
• Reports on consumer spending were mixed but suggested sluggish sales for both general retailers and auto dealers. Reports on tourism were generally more upbeat. Reports on loan demand were mixed, but indicated steady growth. Reports on manufacturing activity were favorable, although contacts in many Districts noted trade-related uncertainty.
• Most Districts reported stronger home sales, although some Districts noted low demand for higher-priced homes.
• Among reporting Districts, agricultural conditions remained weak, with contacts expressing concerns over the impact of current and future rainfall and flooding.

Employment and Wages

• Employment continued to increase nationwide, with nine Districts reporting modest or moderate growth and the other three reporting slight growth. While contacts reported gains across a variety of industries, employment increases were most highly concentrated in high-skilled jobs. However, labor markets remained tight, restraining the rate of growth.
• A majority of Districts cited shortages of skilled laborers, most commonly in manufacturing and construction. Contacts also reported some difficulties finding qualified workers for technical and professional positions.
• Many Districts reported that firms have offered perks such as bonuses and expanded benefits packages in order to attract and retain employees.
• This tight labor market also led to continued wage pressures, as most Districts reported moderate wage growth. Wages for both skilled and unskilled positions generally grew at about the same pace as earlier this year.

Prices

• On balance, prices have risen modestly since the previous report. Input costs increased in the modest-to-moderate range.
• Tariffs, freight costs, and rising wages were often cited as key factors driving this trend. The ability of firms to pass increased input costs on to consumers was mixed.
• Changes in material costs were likewise mixed, with several Districts noting increases in metal prices and decreases in lumber prices. Construction firms across most Districts nevertheless reported net increases in material costs, with several also reporting passing those costs on to their customers.
• Some Districts noted increasing fuel prices, while others noted increasing oil prices and decreasing natural gas prices.
• Crop price pressures generally remain historically low, but price changes since the last report have varied by commodity.

Mostly Drivel

The full report is 32 pages of detailed drivel from all 12 regions. The report isn’t worth a closer look.

Word Scorecard

• Tariff: 19
• Shutdown: 2
• Uncertain: 14
• Inflation: 10
• Recession 2

Region Scorecard April 17 vs March 6

• Slight or Slightly: 5 (March 6: 4)
• Modestly: 4 (March 6: 3)
• Moderate or Moderately: 2 (March 6: 3)
• Unchanged: 0 (March 6: 2)
• Modest to Moderate: 1 (March 6: 0)

Mike “Mish” Shedlock

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