Reading the Beige Book can be sobering as the latest edition may be weaker than January's when at least the Dallas Fed was reporting special strength. But now all 12 districts are back in the "modest-to-moderate" camp with especially soft descriptions for auto sales, which are said to be flat or declining in all districts, and also housing and construction which the report says, outside of isolated strength in some nonresidential markets, is being held down by labor and material shortages.
Inflation is described as moderate along with wage growth which, however, the report notes is picking up in many districts. It also cites modest compensation increases in a few districts due to this year's tax act. Rising costs for building materials and fuel are also noted as well a marked increase in steel prices which the report attributes in part to a decline in foreign competition.
This report won't be raising the heat for a fourth rate hike this year though there are indirect hints of capacity constraints, not only in the description of construction but also the labor market where demand is described as "brisk". Cut-off date was Feb. 26 for today's Beige Book which was compiled by the San Francisco Fed for the March 20 & 21 FOMC.