Economy

March Beige Book Offers Gray Image of US Economy

Thinkstock
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

U.S. economic activity expanded at least slightly in 7 Federal Reserve districts according to the latest version of the Beige Book released Wednesday afternoon. Two Fed districts characterized growth as mixed, another two said activity was flat, and just one, Kansas City, reported a modest decline. Overall, economic activity could be described as muted, at best.

Consumer spending on new vehicles generally improved but the improvements varied from strong sales in some districts (Richmond, Chicago, San Francisco) to lower sales in others (Kansas City, St. Louis Dallas).

Labor market growth continued in a majority of the 12 Federal Reserve districts and wages saw slight to strong growth in most districts. Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, and San Francisco reported positive wage growth among high-skilled workers, while Cleveland, Richmond, Atlanta, Chicago, and Kansas City reported wage growth among low-skill and entry-level positions.

Some other interesting notes from the report include this appraisal of the financial developments in the New York District:

Small- to medium-sized banks in the District report weakening demand for consumer loans and residential mortgages but rising demand from commercial borrowers. Bankers report that credit standards remained unchanged across all loan categories. Bankers reported narrowing spreads of loan rates over cost of funds across all loan categories. The decrease in spreads was most prevalent for commercial mortgages. Respondents also reported no change in the average deposit rate. Finally, banks report lower delinquency rates on commercial mortgages but higher delinquencies on consumer.

The Minneapolis district reported that the slowdown in the energy and mining sectors goes on:

The number of active drilling rigs as of early February in the District fell to its lowest level since 2009. In North Dakota, state agencies were ordered to slash their budgets by 4 percent due to the reduction in oil tax revenue. Output at Minnesota iron ore mines was expected to decrease substantially in 2016, after falling by 35 percent in 2015. Montana coal mines saw shipments fall last year and were expecting to ship less coal in the coming year due to weak international demand.

The Dallas Fed underscored the troubles in the energy sector:

Demand for oilfield services remained depressed as drilling continued to decline. Capacity utilization of equipment was reported to be below 50 percent. An oil producer said they lowered their number of active rigs in the oilfield and were considering deeper cuts to 2016 capital expenditures than they projected late last fall.  At recent pricing and demand, the financial positions of many firms continued to deteriorate, particularly smaller firms. Outlooks remained somber for 2016, with worry that mid-2016 will bring more defaults, bankruptcies, and mergers and acquisitions.

All in all, no big surprises either positive or negative. But no one expected any big surprises since most of the data has already been revealed. The major indexes got a tiny bounce following the release.

The Average American Is Losing Their Savings Every Day (Sponsor)

If you’re like many Americans and keep your money ‘safe’ in a checking or savings account, think again. The average yield on a savings account is a paltry .4% today, and inflation is much higher. Checking accounts are even worse.

Every day you don’t move to a high-yield savings account that beats inflation, you lose more and more value.

But there is good news. To win qualified customers, some accounts are paying 9-10x this national average. That’s an incredible way to keep your money safe, and get paid at the same time. Our top pick for high yield savings accounts includes other one time cash bonuses, and is FDIC insured.

Click here to see how much more you could be earning on your savings today. It takes just a few minutes and your money could be working for you.

 

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.

AI Portfolio

Discover Our Top AI Stocks

Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.

You can follow him investing $500,000 of his own money on our top AI stocks for free.