by Raymond J. Keating-
The latest edition of the Fed’s Beige Book points to an economy expanding at “a modest to moderate rate” in a majority of Federal Reserve districts. However, the St. Louis and Kansas City Districts reported no growth. As for the horizon, worries focus on the coronavirus and the presidential election.
As noted by the Fed, the Beige Book “gathers anecdotal information on current economic conditions in its District through reports from Bank and Branch directors and interviews with key business contacts, economists, market experts, and other sources.”
The information in the current report was collected on or before February 24, 2020.
Some key points noted in the current Beige Book include:
● “Consumer spending generally picked up, but growth was uneven across the nation, including mixed reports of auto sales.”
● “Overall, growth in tourism was flat to modest. There were indications that the coronavirus was negatively impacting travel and tourism in the U.S.”
● “Manufacturing activity expanded in most parts of the country; however, some supply chain delays were reported as a result of the coronavirus and several Districts said that producers feared further disruptions in the coming weeks.”
● “Overall loan growth was flat to up modestly, according to most Districts; notable exceptions were St. Louis, New York, and Kansas City, where declines were reported.”
● “Employment increased at a slight to moderate pace, overall, with hiring constrained by a tight labor market. Insufficient labor lowered growth for many firms and led to delays in construction projects.”
● “Firms reported that the tight labor market and minimum wage increases were putting upward pressure on wages. Companies also spent more on benefits, as the cost of benefits rose and as employers expanded benefits to attract and retain workers.”
So, the economic picture was largely unchanged, but for a positive being that manufacturing grew in most parts of the nation, and some early negatives regarding the coronavirus.
Looking ahead, according to the Fed, the outlook for the near-term largely was for modest growth, with potential risks coming from the coronavirus and the upcoming presidential election. Obviously depending on the direction of these two things, the outlook could change significantly.
Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.