A tight labor market is once again the call from the Beige Book which in January and February first began to highlight signs of labor shortages. Businesses in most of the Federal Reserve's 12 districts reported difficulty finding not only highly skilled employees but low skilled ones as well. Wage increases, though modest, are broadening which is the same description for input costs. Pass through of inflation isn't being cited with selling prices still lagging costs.
Labor descriptions aside, this report is once again quiet. The outlook is still described as positive and economic growth as modest to moderate. One theme is uncertainty over government policy especially trade policy which, together with the strong dollar, are described as headwinds for the factory sector. Punctuating the economic assessment is consumer spending which is once again described as soft.
The Beige Book supports the recent run of economic data that, outside of employment, have been mostly flat especially retail and consumer spending and also manufacturing production. The possibility of a rate hike is, at least in theory, alive for every meeting but the outlook for the May 1 & 2 appears to be a pass. Today's report was compiled for the meeting by the Richmond Fed with a response cutoff date of April 10.