The U.S. economy grew at a modest to moderate pace across most of the U.S., according to the Federal Reserve Beige Book released today.
Economic activity expanded modestly or moderately across most of the United States in January and early February, according to the Federal Reserve Beige Book released today.
Moderate growth was reported in five of the 12 Federal Reserve districts. An equal number reported modest growth, while the districts of Boston and Chicago said growth was taking place at a slow pace. Here’s a breakdown of the Fed’s update:
· Consumer spending: Payroll tax increases, severe weather, rising gas prices, fiscal uncertainty and the Affordable Care Act have impacted consumer spending. Online shopping and deep discounts are becoming increasingly common. Retails sales grew in the majority of districts. Dallas reported somewhat flat sales activity and New York noted a weather-related slowing of sales in February. Sales increased at a slower rate in Chicago, fell in the Kansas are and were mixed in Cleveland and Atlanta.
· Automobile sales: Demand was strong across most of the U.S., though activity was mixed in the St. Louis region and slowed seasonally in the Dallas area. Harsh weather in the Midwest regions increased the demand for auto services, and the continued effects of Hurricane Sandy drove automobile sales in New Jersey. Low financing rates helped boost car sales in the San Francisco region. The future outlook for sales is cautious.
· Tourism: A number of districts saw an increase in tourism, due in part to heavier snows during the winter ski season. International visitors were flocking to Boston and Atlanta, and Hawaii saw an increase in visitors and hotel occupancy rates.
· Services: Demand was generally up. The greatest increases in centered around services provided by technology and logistics firms. Activity was mixed in the Dallas area.
· Transportation services: Shipping volume was up in the Cleveland and Atlanta areas, flat in Kansas City and weak in Dallas. A shortage of experienced truck drivers hampered hiring in the Midwest.
· Manufacturing: The sector showed modest improvement in most regions. Growth was mixed in Philadelphia and Dallas, and weaker in Kansas City. Many districts attributed the slow speed of growth to fiscal uncertainty and regulation. The outlook for future factory activity is increasingly optimistic.
· Real estate: Housing markets improved in nearly all parts of the country, though growth varied by region. Most areas reported rising home prices and falling inventories. Low interest rates continue to motivate buyers, though inventory shortages threaten to curtail future sales and some districts report multiple offers on a home. Commercial real estate activity was more mixed, improving slightly in most districts. Financing for commercial development remains widely available.
· Banking and Finance: Demand for loans was steady or higher across all districts. Refinancing to capture low mortgage interest rates fueled demand for home loans. Demand for commercial real estate loans rose as well, and auto lending increased in the Cleveland, Atlanta and Philadelphia areas. Venture capital and private equity activity slowed in San Francisco.
· Agriculture: Drought continues to impact growers in some U.S. regions, particularly the Kansas City and Dallas districts, while others report improved soil moisture levels due to considerable rain and snow falls. Cattle supplies are at historic lows due to drought-related culling, and higher crop prices have boosted farm incomes.
· Energy: Mining activity and coal production slowed, while oil and natural gas exploration has picked up modestly.
· Employment: Many areas in the country saw an increase in hiring for temporary employees. Uncertainty surrounding the Affordable Care Act constrained hiring in some areas. A shortage of skilled workers – including engineers, truck drivers and software developers – was reported in several districts. Pressure on wages and prices was modest.