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Wednesday, October 16, 2013

Fed’s Beige Book Reports Modest to Moderate Expansion

The Federal Reserve’s beige book indicated that economic activity expanded at a modest to moderate pace in most districts. Growth slowed in the Philadelphia, Richmond, Chicago and Kansas City districts. The report, which covered most of September and early October, included the beginning of the federal government shutdown and debt ceiling debate. As a result, there was an unsurprising increase in uncertainty. The districts remained cautiously optimistic in their future outlook.

Eight out of the twelve districts reported similar growth rates to the previous report. Consumer spending and travel activity expanded in most districts. The report also said, “Business spending and payrolls grew in many Districts. Demand for nonfinancial services rose, and manufacturing activity also expanded modestly.”

Due to the shutdown, price and wage pressures, “were limited.” Moreover, “Financial conditions were little changed on balance, with lending activity remaining modest in most Districts,” which means the markets in early October anticipated a last minute debt ceiling deal.

Housing and auto continued to recover and support the economy. While nonresidential construction expanded at a slower rate, residential and commercial real estate largely continued to improve.

There were mixed reports on agriculture, with excess precipitation and drought both impacting the sector. Energy and mining activity expanded or maintained high levels, with the exception of the coal industry in the eastern half of the nation.

Read the report.

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