Fed’s Beige Book shows modest growth across US economy

Photo courtesy of the Federal Reserve Bank
Courtesy of the Federal Reserve Bank

U.S. economic activity continued to expand at a modest pace in most of the Federal Reserve Bank’s 12 districts from early October to mid-November, the Fed reported in its last Beige Book of the year, which was published Wednesday.

The Fed’s regular, anecdotal update on economic conditions reported steady and moderate growth in the Kansas City and St. Louis districts.

Kansas City District

In the Kansas City district, which includes parts of Missouri and New Mexico and all of Colorado, Kansas, Nebraska, Oklahoma and Wyoming, economic growth was steady with some variation across sectors.

Consumer spending in the region declined slightly, but it still remained higher than year-ago levels.

Energy activity continued to decline moderately in the district, the Beige Book revealed, with expectations remaining negative as the number of active oil and gas drilling rigs decreased.

Despite expectations of big crop yields in the district and some government farm program payments, the Beige Book reported a continuous decline in farm income and a negative outlook for the months ahead.

District manufacturing firms reported flat activity compared to the previous survey, while professional and high-tech firms showed a modest increase in activity. Contacts at those firms said sales were higher than they were one year ago, and they also noted positive expectations for future months.

Real estate activity in the region continued to increase, the Fed report said. Bankers reported steady loan demand, deposit levels and overall loan quality during the period.

Wages in the area remained steady from the previous survey. The major wage changes were seen in the restaurants and transportation sector, with restaurant wages growing and transportation pay declining.

St. Louis District

The Beige Book reported modest economic expansion in the Fed’s St. Louis district, which includes all of Arkansas and portions of Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee.

About half of hiring managers reported the raise of salaries or wages for existing employees, the Beige Book said. Hiring managers in St. Louis area expect to increase payrolls, and most expect to raise starting wages or salaries to attract new hires.

Firms that provide warehouse and storage services as well as health and social assistance services reported plans not only to attract new hires, but also to expand facilities.

Most of the Fed’s business contacts in the district continued to report higher sales. On the negative side, most auto dealers said current-quarter sales are lower than expected.

The report noted that extensive rainfall in the region caused lower crop production compared to last year’s levels. Low crop production and low prices had a negative influence on farm income.

Banking conditions in the St. Louis district remain stable, according to the report. Loan demand is relatively strong, especially for commercial and industrial loans.

Residential real estate activity expanded at a faster pace than in the previous report, and real estate contacts said they expect fourth-quarter home sales to be higher than one year ago.


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