By David Harrison and Paul Kiernan
American businesses see an economy that continues to chug along despite lingering fears over trade, according to a Federal Reserve report released Wednesday.
The Fed's 12 regional banks reported that economic activity had been growing modestly in the early part of the summer, the central bank said in its "beige book" report of anecdotes drawn from business contacts around the country. The information in the report was collected through July 8.
Many firms expressed optimism about the future even though they were keeping an eye on the ongoing trade negotiations.
"The outlook generally was positive for the coming months, with expectations of continued modest growth despite widespread concerns about the possible negative impact of trade-related uncertainty," the report said.
The report should reassure Fed officials that the economy is in little danger of tipping into recession anytime soon. Despite the healthy economy, Fed Chairman Jerome Powell signaled in congressional testimony last week that the central bank was ready to cut interest rates -- perhaps as soon as the July 30-31 meeting because of concerns that slowing global growth and trade tensions could have domestic repercussions.
Firms pointed to consumer spending as a strong point, despite flat vehicle sales. Home improvement stores in Oregon saw sales rising moderately and a major apparel company based in the state said it expected demand to remain healthy. Retail sales have been rising for four straight months according to the Commerce Department.
Businesses in the tourism industry were generally upbeat as well, except on Cape Cod where 20 days of rain in June dampened spirits. In Delaware, business contacts said traffic was "massive" over July Fourth with long waits for restaurants on a Tuesday night.
Manufacturers continued to express concern about the uncertainty surrounding trade negotiations. A maker of electronic components in the Northeast said it had laid off people in response to tariffs and moved an assembly line from the U.S. to Germany where it could receive Chinese imports without paying tariffs.
Firms continued to complain of worker shortages. Some construction companies in Idaho debated relaxing drug testing. Price inflation pressures were slightly weaker from the previous reporting period, the report said. Some firms noted that competitive pressures prevented them from passing on increases in input prices. Wages grew at a modest to moderate pace, the report said, with some employers expanding benefit packages to draw workers.
Agricultural producers in the Midwest continued to suffer the consequences of spring floods. Many farmers in the Chicago area said it was too late to plant corn and soybeans forcing them to plant less-profitable cover crops and file for insurance claims.
"I have been farming for 48 years no and this is the worst spring/summer planting season we have experienced," said an Indiana contact.
Write to David Harrison at firstname.lastname@example.org and Paul Kiernan at email@example.com
(END) Dow Jones Newswires
July 17, 2019 14:15 ET (18:15 GMT)
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