Beige Book: Economic Activity Expands, but Paces Vary

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

National economic activity continued to expand, but the pace of growth varied across the nation, according to the latest Beige Book. Most Federal Reserve districts reported modest to moderate economic growth, with the St. Louis District¹ reporting modest improvement.

Real Estate

Residential real estate activity strengthened, on balance, with robust growth in three districts and mixed reports in three others. Several districts credited a mild winter for stronger home sales, and the pace of home price increases picked up in a number of districts. Commercial real estate activity generally increased as well, with leasing activity and rents rising in many districts.

Residential real estate activity was strong in most of the St. Louis District. Residential construction activity was modestly positive throughout most of the District, with single-family building permits increasing in almost all metropolitan statistical areas in February compared with a year ago.

Labor Markets

Most districts reported job gains, and several districts (including the St. Louis District) reported rises in service industry employment. Energy companies continued to reduce payrolls, with reports of layoffs coming from the Cleveland, Atlanta, St. Louis, Minneapolis and Dallas districts. Several districts reported difficulty filling certain low- and high-skilled occupations.

Wages increased in all districts but one (Atlanta). The St. Louis District was one of four to report moderate wage growth. Nationally, the strongest wage pressures were for occupations where labor shortages are pressing and turnover is elevated.

Consumer Spending

Consumer spending increased modestly in most districts in late February and March. Several cited generous discounts and promotions, favorable credit conditions, and low gas prices as supporting factors. In the St. Louis District, retail sales growth has been modest since the previous reporting period, with most contacts reporting a slight increase in sales compared with 2015 levels.

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: Nearly Half of Job Switchers Earn Less in Their New Roles
• On the Economy: Optimism Wanes among District Business Contacts