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Wednesday, January 14, 2015

Beige Book: “Modest” to “Moderate” Economic Expansion

Economic activity continued to expand in all 12 districts, according to the first Federal Reserve Beige Book of 2015 covering the period from mid-November through late December of 2014. Most districts reported “modest” or “moderate” growth, however the Kansas City district indicated that growth slowed slightly. The Dallas District also indicated that growth slowed slightly during the reporting period and that several contacts expressed concern about the effect of lower oil prices on the District economy.

Demand for business and consumer credit grew, and credit quality generally remained good, with overall reductions in loan delinquencies. However, several Districts commented that their contacts indicated that stiff competition for high-quality borrowers was leading to lower underwriting standards among lenders more generally.

Demand for energy-related products and services weakened somewhat, but overall output increased.

Consumer spending advanced in most districts, generally driven by year-over-year gains in retail sales, as well as moderate to strong growth in auto sales. Demand for nonfinancial services varied across districts, but appeared to be moderate on balance.

Payrolls expanded moderately in a variety of sectors across the districts, although a few energy firms in the Dallas district reported hiring freezes and layoffs.

Construction and single-family real estate sales were flat on balance, however commercial real estate activity and commercial construction expanded in most districts.

Wage inflation was limited to workers with particular technical skills. Prices increased slightly, on net, in most districts. However, several districts reported that the cost of a variety of construction materials increased.

Read the Federal Reserve release.

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