The Federal Reserve released it’s Biege Book Wednesday with the focus on wages and labor markets. The labor market tightened further while tariffs remain a concern as they spread more broadly.
The Federal Reserve released it’s Biege Book Wednesday with the focus on wages and labor markets. The labor market tightened further while tariffs remain a concern as they spread more broadly.
This report was prepared at the Federal Reserve Bank of Philadelphia based on information collected on or before Novemeber 26, 2018.
This document summarizes comments received from contacts outside the Federal Reserve System and is not a commentary on the views of Federal Reserve officials.
“There was some concern that seasonal patterns may be unusual this year as firms try to import goods before additional tariffs on Chinese goods take effect on January 1.”
Summary of Economic Activity
Most of the twelve Federal Reserve Districts reported that their economies expanded at a modest or moderate pace from mid-October through late November, though both Dallas and Philadelphia noted slower growth compared with the prior Beige Book period. St. Louis and Kansas City noted just slight growth. On balance, consumer spending held steady – District reports on growth of nonauto retail sales appeared somewhat weaker while auto sales tended to improve, particularly for used cars. Tourism reports varied but generally kept pace with the economy. Tariffs remained a concern for manufacturers, but a majority of Districts continued to report moderate growth in the sector. All Districts reported growth in nonfinancial services – ranging from slight to strong. New home construction and existing home sales tended to decline or hold steady, while construction and leasing of nonresidential structures tended to rise or remain flat. Overall, lending volumes grew modestly, although a few Districts noted some slowing. Agricultural conditions and farm incomes were mixed; some Districts noted impacts from excessive rainfall and from tariffs, which have constrained demand. Most energy sectors saw little change or modest growth. Most Districts reported that firms remained positive; however, optimism has waned in some as contacts cited increased uncertainty from impacts of tariffs, rising interest rates, and labor market constraints.
Highlights of December 2018 Beige Book
Growth and Tariffs
- Majority of districts have moderate factory growth
- Lending volumes grew modestly, some slowing noted on balance
- Consumer spending held steadily
- Reports of tariff induced cost increases have spread
- Tariffs remains a concern for manufacturers
- Tariff related costs increases have spread more broadly from manufacturers and contractors to retailers and restaurants
- Dallas, Philadelphia reported slower growth
Wages & Labor Market
- Labor markets tightened further across broad range
- Employment gains ebbed, due in part to workers shortages
- In addition to raising wages, most districts saw firms enhancing nonwage benefits
Inflation
- Reports of tariff induced cost increases have spread
- Several districts noted falling oil and fuel prices alongside rising freight costs
- Tariff related costs increases have spread more broadly
- inputs costs rising faster than final goods prices on balance
- Prices rose at modest pace in most districts
Source : Beige Book December 5 2018
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