The U.S. economy expanded “gradually” in July according to today’s release of the Federal Reserve’s Beige Book. The expansion included most regions of the country and sectors of the economy, with nine districts reporting modest or moderate growth, two (Philadelphia and Richmond) reporting slow growth and lower manufacturing, and one (Boston) citing mixed reports.

Retail activity, including auto sales, increased although the increases were small in some areas, while non-financial services improved slightly in many Fed districts. Demand for loans increased in about half the districts, while demand was either soft or slightly weaker in three others.

All 12 Fed districts reported increases in real estate markets, with rising home sales, home prices, or home construction. Commercial real estate markets were also generally positive.

Mining and energy production activity was “generally high and increasing” although the Minneapolis district noted a softening demand for coal (the coal fields of Wyoming and Montana are included in the Minneapolis district).

On the jobs front, the Fed said, “Hiring was said to be modest across the Districts, and wage pressures were characterized as contained.” In general, prices for finished goods were stable as well, though price rises could be in store as raw materials prices rise.

What all this means going into the weekend meeting at Jackson Hole remains to be seen. There appears to be plenty of reason for the Fed to continue its current “wait and see” attitude, but if the Fed decides to try to boost employment we could get a tip on that from Bernanke’s Friday speech. Stay tuned.

The Beige Book is available here.

Paul Ausick

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