Beige Book: U.S. Economic Activity Continues to Expand

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

U.S. economic activity continued to expand, with most districts indicating a modest or moderate pace of expansion, according to the latest issue of the Beige Book. Outlooks were mostly positive, with several districts expecting growth to continue at a slight to moderate pace. Information from business contacts suggests economic conditions in the Eighth District¹ have improved modestly.

Residential construction and real estate activity continued to expand, although a few districts reported that low home inventories continued to constrain sales. In general, home prices continued to rise at a modest pace.

In the Eighth District, residential real estate activity improved moderately. Home sales were strong in August, rising 13 percent in Little Rock and St. Louis and 14 percent in Memphis; Louisville saw a more modest 3-percent increase. The number of homes for sale continued to decline in most areas even though residential construction activity rose moderately.

Employment increased at a modest pace, and labor market conditions continued to be tight across most districts. As noted in the report, there were multiple statements of difficulty hiring in manufacturing, hospitality, health care, truck transportation and sales.

Wage gains held fairly steady at modest levels, although some districts reported rising pressure for some sectors.

Despite continued tightening in the Eighth District’s labor markets, wage growth and employment growth have generally been moderate. Still, contacts mentioned high demand for labor in some industries. Wages for entry-level jobs in these industries have also generally risen faster than wages in other sectors.

Overall consumer spending was mixed since the last report. The near-term outlook in five districts (including the Eighth District) was for modest growth, while contacts in two districts anticipated mostly flat sales. Automobile sales were mixed.

General retail and auto sales have grown modestly in the Eighth District, and most contacts throughout the District expect sales to be higher or slightly higher in the fourth quarter.

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

• St. Louis Beige Book
• On the Economy: Higher GDP Growth in the Long Run Requires Higher Productivity Growth
• On the Economy: Employment, Capacity Utilization and Business Cycles