The Federal Reserve has issued its latest Beige Book, summarizing the comments received from businesses and other contacts outside the Federal Reserve. While investors flock to this as Fed outlooks, the Fed does note right up front that this is not a commentary on the views of Federal Reserve officials. The report was prepared by the Federal Reserve Bank of New York and is based on information collected on or before May 23, 2014.
The key takeaway here is that things are still getting better in the economy. That should be good news when you consider the slate of soft economic reports of late, particularly the negative GDP report from the first quarter of 2014.
First and foremost, the view was unanimous that economic activity expanded in all 12 Fed regions. Consumer spending was up, housing markets are considered mixed with supply constraints, and even the labor market is viewed to have strengthened with hiring activity steady. On the inflation front, prices were deemed to be contained, and wage pressures were called to be subdued.
On that pesky weather from earlier in the year, the Fed said, “Although improved weather generally gave a boost to business, lingering wintry weather in the Northeast continued to weigh on sales in parts of the Boston and New York Districts.”
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Strong new vehicle sales were reported in over half of the districts. Activity in the service sector (ex-finance) grew across most reporting districts. Transportation activity strengthened in most districts reporting on that sector. Home prices continued to increase across most of the country. Another observation was that overall lending activity increased throughout the nation.
The Beige Book summary for the nation said:
All twelve Federal Reserve Districts report that economic activity expanded during the current reporting period. The pace of growth was characterized as moderate in the Boston, New York, Richmond, Chicago, Minneapolis, Dallas, and San Francisco Districts, and modest in the remaining regions. Compared with the previous report, the pace of growth picked up in the Cleveland and St. Louis Districts but slowed slightly in the Kansas City District.
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