Beige Book: Economic Activity Expands in 9 Districts

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.

Economic activity expanded in nine of the 12 Federal Reserve districts, according to the most recent Beige Book. The St. Louis District¹ was one of seven to describe its growth as modest. (The other two districts characterized growth as moderate.)

Real Estate

Four districts, including the St. Louis District, saw positive residential real estate activity as measured in sales. Prices rose slightly to modestly overall in all reporting districts. Nonresidential real estate activity was characterized as modest to moderate in most reporting districts.

Residential real estate activity in the St. Louis District continued to improve. Also, residential real estate construction activity increased throughout most of the District, and commercial construction activity increased throughout all sectors.

Labor Markets

District labor markets continued to improve, with employment increases evident in reports from seven districts. Four districts described labor markets as tight or tightening. Seven districts mentioned greater wage pressures for skilled workers in a variety of industries, and wage pressures among low-skilled workers were almost as pervasive.

Business contacts in the St. Louis District indicated that growth in employment and wages was modest and prices were generally unchanged. Year-end raises were generally at or slightly above last year’s levels, while prices charged to customers were generally unchanged from one year ago.

Consumer Spending

Most districts reported some growth in consumer spending through the holiday season. The pace of growth was typically characterized as ranging from slight to moderate. Auto sales continued to be positive in most reporting districts. Contacts in roughly half of the districts cited continued lower gas prices as a contributing factor for auto sales, particularly for increases in SUV and light truck sales.

In the St. Louis District, retail sales growth remained modest. Contacts reported holiday sales were slightly higher than one year ago and year-to-date sales for 2015 were slightly above 2014 levels. Most auto dealer contacts said year-to-date sales were higher compared with the same time the previous year. However, several contacts also reported a slowdown in activity over the past few months.

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: Jobs Involving Routine Tasks Aren’t Growing
• On the Economy: Fourth Quarter Burgundy Books: Unemployment Lowest in Years