Fed Chairman Powell Likens Now To Mid 90s Modest Rate Cuts

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    Helmholtz Watson

    Fed Chairman Powell in his Denver speech likened…


    Helmholtz Watson

    Fed October Beige Book:

    This report was prepared at the Federal Reserve Bank of Cleveland based on information collected on or before October 7, 2019. This document summarizes comments received from contacts outside the Federal Reserve System and is not a commentary on the views of Federal Reserve officials.


    Economy expanded at slight-to-modest pace
    Businesses see expansion continuing, many have cut outlook
    Business activity varied across the country

    Districts in south and west were more upbeat that midwest and great plains
    Spending was solid on balance, housing market conditions changed little
    Some districts suggested persistent trade tensions and slower global growth weighed on activity; early impact of GM strike was limited

    Most expect economic expansion to continue; however many lowered their outlooks for growth in coming 6-12 months
    A number of manufacturers reduced headcount because orders were soft, some cut hours rather than reduce staff
    Wages rose moderately in most districts, with upwards pressure noted for lower-skill workers

    Employers continued to use bonuses and benefits to attract and retain talent
    Most districts characterized the recent pace of prices increases as modest
    Retailers and manufacturers noted rising input costs
    Shipping rates remained lower than they were earlier in the year because of excess capacity

    Highlights by Federal Reserve District

    Signs of slowing have become more widespread in recent weeks, although software and IT services firms reported results that exceeded expectations and real estate markets have not weakened. Outlooks have softened; contacts attribute some of the softening to increased uncertainty, not poorer current results.

    New York
    Regional economic growth slowed to a subdued pace. Job creation remained sluggish, largely reflecting a shortage of available workers, as labor markets remained very tight and wage growth picked up. Prices continued to rise modestly. Service sector activity weakened noticeably, and real estate markets softened somewhat.

    On balance, business activity continued at a modest pace of growth during the current Beige Book period. Further labor market tightening caused “acute pressure,” described as increased hiring difficulty, constrained growth, and higher wages. Still, wages grew moderately and prices rose modestly overall. Most firms expressed a positive outlook, with ongoing caution amid heightened uncertainty.

    District activity was stable on balance. Professional and business services, auto sales, and home sales rose while residential construction and freight fell. Manufacturing activity stabilized after a couple periods of decline. Employment was stable overall, though there were some scattered reports of softening. Wages increased modestly because of tight labor markets. Selling prices rose modestly.

    The Fifth District economy continued to grow at a modest rate. Manufacturers saw declines in shipments and new orders; however, port and trucking activity rose. Retail, tourism, and nonfinancial service firms generally experienced slight to moderate growth. Residential and commercial real estate sales, leasing, and construction picked up, overall. Labor markets remained tight. Wages and prices rose moderately.

    The economy expanded at a modest pace. Labor markets remained tight, and reports of wage pressures were more widespread among low-skilled positions. Nonlabor input costs rose for some contacts. Overall retail sales were mixed. Residential real estate activity improved, while nonresidential activity was stable. Manufacturing activity rebounded since the previous report.

    Economic activity increased slightly overall. Employment, consumer spending, business spending, and construction and real estate all increased slightly. Manufacturing production declined a bit. Wages and prices rose slightly and financial conditions improved modestly. The crop harvest got off to a slow start, as rains delayed fieldwork.

    St. Louis
    Economic conditions have improved slightly since the previous report. Contacts from multiple industries noted a heightened sense of economic uncertainty. Consumer spending activity ticked up. Local bankers reported growth in outstanding loan volumes. However, manufacturing activity contracted slightly, and row crop production levels are expected to be well below 2018 levels.

    Ninth District activity grew at a slight pace. Employment was flat. Labor demand remained healthy with some signs of softness. Manufacturing activity decreased slightly, with some contacts expecting a further slowdown in the final quarter of 2019. Consumer spending was mixed, but late-summer tourism was solid. Commercial construction and real estate increased, but residential was mixed. Oil drilling increased slightly.

    Kansas City
    Economic activity expanded slightly in late August and September. Consumer spending rose modestly, and sales in the transportation, professional and high-tech services, and wholesale trade sectors were solid. Real estate activity increased, but residential construction activity slowed. However, energy and manufacturing activity declined, and agricultural conditions remained weak.

    Economic activity continued to expand moderately. Energy activity declined, but growth remained solid in manufacturing and services. Home sales increased and loan demand accelerated. Selling prices were largely flat, as firms’ ability to pass through cost increases remained limited. Hiring continued at a steady pace. Outlooks were mixed and uncertainty remained elevated.

    San Francisco
    Economic activity in the Twelfth District expanded at a modest pace. The labor market remained tight, and wage growth was moderate. Reports on price inflation were mixed. Sales of retail goods increased modestly, and consumer and business services activity expanded slightly. The pace of commerce in the manufacturing sector was little changed, and the agriculture sector slowed further. Activity in residential and commercial real estate markets was solid, and lending grew further.

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