Eight times a year, the Federal Reserve System publishes the Beige Book. This summary of the economic conditions, as reported by the 12 Federal Reserve districts across the U.S., is based on anecdotal data gathered by the 12 Fed districts.
Released in early January, the latest Beige Book indicated the overall economic activity in the U.S. remained relatively modest since the last Beige Book report. Importantly, all 12 districts showed some growth in consumer spending. Within the U.S., personal consumption accounts for in excess of 70 percent of aggregate consumption. Personal consumption is generally measured in terms of expenditures on both goods and services.
Six of the Fed districts reported positive growth in overall manufacturing, with three districts indicating contracting manufacturing activity and two districts indicating essentially no change in manufacturing activity since the last report. Not all districts responded to all of the inquiry categories.
A significant indicator of consumer confidence is the level of activity in the residential housing sector. Of the Districts reporting residential real estate activity, all reported an expanded level since the last measurement period. Nine Districts reported moderate to strong activity in this economic sector.
Associated with the reported levels of consumer spending and residential real estate activity, four districts responded with higher loan demand, while only the St. Louis district reported a slight decline in loan demand. As this measure includes loans for business use and personal use, the apparently somewhat stronger demand from consumers appears to have been tempered by comparatively lesser demand from businesses.
Any building of wage pressures could signal impending inflation. The January Beige Book indicated overall U.S. labor markets continued generally unchanged from the prior report and wage pressures generally contained. Fiscal cliff concerns were cited by six districts as part of the rationale to delay hiring. Another concern mentioned was the evolving heath care environment and associated potential costs from these policy mandates.
A general message from this most recent Beige Book release would be that overall economic activity in the U.S. remains slightly positive, but well below potential. While there are selected areas of price increases, the aggregate inflation picture continues mostly subdued.
Kirby Brown is the CEO of Beneficial Financial Group in Salt Lake City.