The Federal Reserve Bank of St. Louis | Chris Yunker/Flickr

Fed report suggests modest economic expansion, continued trade concern



Across the U.S., economic activity increased slightly between early July and late August, according to the Federal Reserve Bank Beige Book report released Wednesday.

In the report, which offers anecdotal updates on conditions in the Fed’s twelve districts, contacts expressed continued concern over the country’s ongoing trade war with China, with many considering it the cause of district-wide decreases in manufacturing and agricultural activity.

St. Louis district

Despite more or less unchanged economic conditions since July, contacts in the St. Louis district — composed of all of Arkansas and portions of Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee — noted increased pessimism about future quarters.

Employment and wages have grown since July, making hiring difficult for district contacts, including a Little Rock, Arkansas, employer who said recent graduates applying to a local engineering firm expected starting wages up to $15,000 more than the firm offered.

Businesses across the district expressed similar grievances, and many said they’ve become more lax on hiring requirements in order to attract workers.

Prices have increased slightly, according to the report, particularly for steel, construction materials and automobiles, which contacts considered effects of the stiff trade negotiations with China.

Sales tax collections increased in Missouri in July. Most retailers and auto dealers said sales had increased since this time last year, but auto dealers reported increased purchases of used and low-end cars.

In terms of manufacturing, contacts noted slowed growth in production, new orders and capacity utilization — the first time all three have been reported down in three years across the district. In Missouri, however, new orders and production grew.

People are taking out somewhat fewer loans, which bankers don’t expect changing in the fourth quarter. Agriculture conditions are down, but district contacts expect government assistance will help ease circumstances in the short run.

Kansas City district

The Kansas City district — made up of western Missouri, Nebraska, Kansas, Oklahoma, Wyoming, Colorado and northern New Mexico — experienced increased economic activity, including higher consumer spending and wholesale trade.

Manufacturing fell, which some attributed to the U.S. battle over tariffs with China, but contacts expect it will increase in the coming months.

Like in the St. Louis district, employment grew, particularly in the real estate, health services and retail trade sectors. Employment fell in the manufacturing, energy and transportation sectors. Contacts expect increased employment and stagnant wages in upcoming quarters.

Prices and consumer spending increased, and auto industry contacts noted higher sales, unlike the St. Louis district.

People are purchasing more loans, particularly for residential real estate and consumer installment. Commercial, industrial and agricultural loan purchasing declined. Agricultural activity has declined, with decreased crop, livestock, hog, soybean, cattle, corn and wheat prices.

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