Beige Book: Modest Expansion in Economic Activity

During weeks when the Federal Reserve’s Beige Book is released, the On the Economy blog features a post based on the book on Wednesdays in lieu of the regularly scheduled Thursday post.

National economic activity as a whole underwent modest expansion over the past several weeks, according to the latest edition of the Federal Reserve’s Beige Book. The St. Louis District¹ was one of six districts to experience modest growth.

Real Estate

Residential activity generally improved since the last Beige Book report. Almost all districts reported rising prices and sales volume. A number of districts said the market for lower and moderately priced homes outperformed the high end of the market.

In the St. Louis District, residential real estate activity continued to expand, but at a slower pace than indicated in the previous report. District contacts expect steady improvement through the end of the year.

Labor Markets

Nationally, labor markets generally tightened since the last report. Reports from nine districts, including the St. Louis District, said employment was up modestly to moderately. Many districts experienced difficulty finding skilled workers, and a few also reported difficulties finding unskilled workers.

Wage growth remained subdued in most districts, with eight districts, including the St. Louis District, noting only slight to modest wage increases.

Contacts from St. Louis District firms in warehousing and distribution services, information technology services, and health care and social assistance services reported plans to hire new employees. Overall, St. Louis District contacts reported wage and salary adjustments of around 2 percent.

Consumer Spending

Consumer spending nationally grew at a moderate pace. Vehicle sales generally increased in the latest reporting period. The St. Louis District was one of two to describe auto sales conditions as mixed.

Local contacts in the St. Louis District indicated that the retail sector experienced modest growth. However, some contacts noted a slight slowdown in activity during the final weeks of summer. Regarding auto sales, St. Louis District contacts continued to indicate a shift in demand toward trucks and SUVs and away from cars due to lower gas prices.

Notes and References

¹ The St. Louis District includes all of Arkansas and parts of Illinois, Indiana, Kentucky, Mississippi, Missouri and Tennessee.

Additional Resources

• St. Louis Beige Book
• On the Economy: Predicting the Impact of Oil Prices on Inflation
• On the Economy: Are We Really Consuming More Services?