The Beige Book prepared for the August 9 FOMC meeting indicates that economic activity continued to grow in the period since the last report. However, the pace has moderated in many Districts. The good news is that consumer spending has picked up, albeit modestly.
"The six Districts nearest the Atlantic seaboard reported a slowdown in activity since the previous Beige Book report; activity was little changed in the Atlanta District and unchanged or slightly improved in the Richmond District. Of the other six Districts, the Minneapolis District reported political and weather-related disruptions that temporarily slowed growth, and the Dallas District slowed to a moderate pace of growth. The remaining four Districts continued to grow modestly. The previous Beige Book reported a slower growth rate for four Districts, seven Districts growing at a steady pace, and one District with faster growth."
Consumer spending has improved.
"Consumer spending increased overall, with modest growth of nonauto retail sales in a majority of Districts. Falling gasoline prices throughout most of this reporting period may have encouraged a pickup in shopping trips and some additional spending since the previous Beige Book."
Autos sales have been held back by lean inventories of models dependent on parts from Japan. However, tourism is stronger in areas not affected by severe weather.
Residential real estate activity is little changed and weak although construction and activity in the residential rental market has improved.
Manufacturing posted gains overall but was mixed. The good news is that "mixed" did not include contraction.
"Manufacturing activity expanded overall, with two Districts reporting somewhat stronger growth since the last Beige Book, many Districts reporting steady or slowing in growth, and two Districts reporting little change."
Labor markets remain soft.
"Although most Federal Reserve Districts observed modest hiring increases, labor market conditions remained soft. Wage pressures continued to be subdued for all but a few specific occupations in some Districts. Price pressures moderated somewhat in many Districts, although some firms indicated that they were able to pass on some cost increases to their customers."
Wage pressures, however, were rising for select industries, including high-tech, energy, and transportation.
Overall, the economy continued to post modest growth with inflation contained for now. Today's report shows modest forward momentum for the economy. On the news, markets still were more focused on the lack of apparent progress on debt ceiling negotiations.