The Beige Book is a compilation of mostly anecdotal evidence from the 12 Federal Reserve Districts about the state of the economy. This month’s edition was just released. You can read the full report here.
Generally I would describe the report as being upbeat, but not exuberant. Slow and steady progress is widespread, both geographically and across sectors of the economy. The major exception to that is Real Estate, both residential and Commercial.
While some companies are facing cost pressures from raw materials, they are not facing much in the way of wage pressure, so overall net margins are really not threatened, even though they are, for the most part, having trouble raising prices. Below I present, without much comment some of the key findings of the report, particularly focusing on the remarks that are generalized across all, or most of the districts, rather than any particular district.
"Reports from the twelve Federal Reserve Districts indicated that economic activity generally continued to improve since the last report. While many Districts described the improvements as only moderate, most Districts stated that gains were widespread across sectors…
"Manufacturing continued to lead, with virtually every District citing examples of steady improvement, often with reports of increased hiring…
"Reports focusing on the near-term outlook were most often upbeat. Some Districts, however, also noted that uncertainties remained high…
"Most Districts reported signs of improvement in at least some of their labor markets… Wage pressures were described by most Districts as weak or subdued, but higher commodity costs were widely reported to be putting increasing pressures on prices. Energy prices were cited most often, but raw materials in general were an increasing concern of businesses…
"Consumer spending picked up modestly across most Districts since the last report… Automobile sales rose in most Districts…
"Non-financial service firms generally reported expansion… Reports from transportation services firms were mostly positive…
"All twelve Districts reported that manufacturing activity increased since their previous reports. Ten of the twelve Districts cited a further pickup in production, while Cleveland and Dallas observed steady to slightly improving activity…
"Comments on the outlook were generally positive. Boston mentioned that manufacturers generally remained cautiously optimistic but voiced greater uncertainty about the outlook for the rest of the year, based on the disruption at Japanese facilities, the geopolitical climate worldwide, and ambiguity about U.S. government spending plans…
"Real estate markets for single family homes for the most part either were little changed from low levels or continued to weaken across all Districts… Commercial real estate activity remained weak across all Districts, although seven reported slight improvements since their last report…
"Most Districts cited loan demand as either unchanged or slightly improved since the last report, although many of the Districts citing improvements noted weak demand in some market segments… Several Districts reported that credit standards were unchanged or slightly tighter and that competition for quality loans was intense…
"Most Districts reported that labor market conditions were generally stronger than in their last reports…
"Input prices rose in most Districts, particularly for cotton and other agricultural commodities, petroleum-based products, and industrial metals… The ability to pass through increases, however, varied in both the Chicago and Atlanta Districts, with manufacturers generally being more successful than retail or construction firms. Contacts in the San Francisco District reported a limited ability to pass through higher input prices on anything other than food and gasoline… Wage pressures were reported to be mostly contained…"
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