Fed's Beige Book Reports "Modest" Pace of Economic Activity
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
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
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
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
"I have been farming for 48 years no and this is the worst
spring/summer planting season we have experienced," said an Indiana
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)
Copyright (c) 2019 Dow Jones & Company, Inc.