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Thursday, September 4, 2014

Beige Book: U.S. Economy Grew at “Moderate Pace”

The Federal Reserve’s Beige Book, released yesterday indicated that economic expansion is continuing at a “moderate" pace, an uptick from the previous report. Boston and Richmond reported strong growth. Reports from New York, Cleveland, Chicago, Minneapolis, Dallas, and San Francisco Districts all indicated moderate growth. Philadelphia, Atlanta, St. Louis, and Kansas City saw the pace of growth improve modestly. All districts were generally optimistic about future growth.

Consumer spending expanded in most districts and remained strong, as reported in the last Beige Book, a positive sign for third quarter GDP growth. Vehicle sales remained strong, with Philadelphia and Dallas reporting record-levels of auto sales. However, there was some retreat in auto sales in parts of the New York District. Tourism activity was reported to have increased across much of the nation, with many Districts reporting higher hotel booking and occupancy rates.

Manufacturing growth was mixed. The Beige Book found that report by district were, “divided almost evenly into one of three characterizations of the sector's activity: expanding, contracting, or unchanged.”

Loan volumes generally increased since the last reporting period. Loan volumes increased in eight districts and remained constant in one. “Credit standards were largely unchanged. Six Districts reported improving credit quality, falling delinquency rates, or both.”

The report noted that market conditions remained relatively unchanged since the last reporting period. Continuing a recent trend, many districts report difficulty filling qualified workers for high-skilled positions. Notably, the districts reported upward wage pressures, a positive sign of a growing economy. Moreover, the wage pressure was generally for lower skilled positions, which have the stickiest wages since the recession.

Read the Federal Reserve release.

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