Fed's Beige Book Reports Slight To Modest Growth
October 16 2019 - 2:30PM
Dow Jones News
By David Harrison
Washington--Firms lowered their growth expectations for the next
six to 12 months as they continued to grapple with the fallout of
the slowing global economy and uncertainty over trade, the Federal
Reserve said Wednesday.
The U.S. economy expanded at a "slight to modest pace" through
early October, the Fed said in a report compiling anecdotes from
business contacts around the country known as the "beige book."
That was a slightly weaker assessment of the economy than in the
previous beige book, released in September.
Spending on nonresidential construction grew more slowly, the
Fed said. Manufacturing industries edged down with some contacts
saying "that persistent trade tensions and slower global growth
weighed on activity."
Faced with fewer orders, some manufacturing firms reduced their
headcount, the Fed said. In some cases, employers chose to reduce
worker hours rather than cut staff.
Agricultural conditions continued to deteriorate, largely due to
weather factors, the report said.
Overall, employers continued to struggle finding workers, the
report said, leading to moderately higher wages, particularly in
the retail and hospitality industries and among professional and
technical workers.
Prices increases remained modest, the Fed said, even though
retailers and manufacturers reported higher input costs.
The monthlong strike by workers for General Motors Co. which has
idled more than 30 plants has had a limited economic impact so far,
the report said.
However, in the Fed's Chicago district, the strike's effect has
been noticeable. One auto supplier facing a decline in sales due to
the strike chose to cut worker hours rather than laying people off
"because he felt that in the tight labor market, it would be too
difficult to find new workers after the strike ended," the report
said.
Bankers in Philadelphia said they had been hearing more talk
about the possibility of a mild recession next year. "However, most
indicated that they and their clients felt that the U.S. economy
was fundamentally sound and that they were planning (cautiously)
for ongoing growth next year," the report said.
The report found a regional variation in firms' outlooks. In the
Midwest and Great Plains states, businesses were more downcast than
in the West or the South.
In the Kansas City district, for instance, business contacts
said manufacturing activity had weakened and several anticipated
slower growth in capital spending, in part due to tariffs.
On the other hand, real estate and construction activity in the
San Francisco region was strong.
Write to David Harrison at david.harrison@wsj.com
(END) Dow Jones Newswires
October 16, 2019 14:15 ET (18:15 GMT)
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