U.S. Federal Reserve Beige Book

Ksenia Bushmeneva, Economist | 416-308-7392

Date Published: April 17, 2019

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Beige Book paints steady-as-she-goes economic activity in March and early April

  • Today's Beige Book showed that economic activity increased at a slight-to-moderate pace in twelve Federal Reserve Districts in March and early April. The report noted that the pace of economic growth remained unchanged in most Districts, while a few Districts reported some strengthening.  
  • Reports on manufacturing activity were more favorable, although trade-related uncertainty continued to cast a shadow on business sentiment. Tariffs were mentioned 17 times in the report – about the same as in the previous two issues. 
  • Inflationary pressures have picked up modestly since the last report, but remained well-contained. Input costs increased in a modest-to-moderate range, with tariffs, transportation costs and rising wages cited most frequently as the main contributing factors. Construction firms reported net increases in material costs, and some were passing higher costs to customers. Some districts reported higher prices of fuel, reflecting the recent bounce back in oil prices.
  • As has become customary, the labor market remained tight, leading to continued wage pressures, with most Districts reporting moderate wage growth. Tight labor markets were said to be restraining hiring.  
  • Activity in the housing market improved, with most Districts citing stronger home sales, although some Districts noted low demand for more expensive homes. Reports on consumer spending suggested sluggish sales for both general retailers and auto dealers.   

Key Implications

  • There were very few notable changes in this Beige Book relative to the previous one. Activity in a few sectors – namely manufacturing and home sales – appeared to be slightly more favorable than the last time. Price pressures have strengthened somewhat, largely reflecting higher oil prices, but overall, the report continued to paint a picture of moderate economic activity at the start of the year.
  • It was encouraging to see reports of stronger home sales as we move into the key spring market. The recent declines in mortgage rates, more moderate price growth, higher inventory of houses on the market, alongside rising household income should bring more buyers to the market in coming months.