Beige Book Describes A Solid, Stable "Modestly Expanding" Economy... So Time For A Rate Cut?

Back in June, following the April downgrade in the Fed 's assessment of the US economy, the Fed's Beige Book signaled a "slight improvement" in the economy, describing economic activity expanding at a "modest pace overall" from April through mid-May, and dropping the "slight" classifier.

Now, one month later, the economy appears to be expanding on its recent recovery as an economic activity "continued to expand at a modest pace overall" from mid-May through early July, with little change from the prior reporting period, according to the latest, just released Beige Book.

Among the various indicators suggesting a solid, stable, expanding economy, the Beige Book notes that:

  • In most Districts, sales of retail goods increased slightly overall,
  • Activity in the nonfinancial services sector rose further
  • Tourism activity was broadly solid, with Atlanta and Richmond recording robust growth in this sector,
  • Some Districts continued to report healthy expansion in the transportation sector.
  • Home sales picked up somewhat, but residential construction activity was flat.
  • Nonresidential construction activity increased or remained strong in most re-porting Districts, and commercial rents rose
  • A modest pickup in manufacturing activity since the last reporting period was observed in a few Districts
  • Increased demand for loans was broad-based, with all but two Districts noting some growth in financing activity
  • Employment grew at a modest pace, as labor markets remained tight; contacts across the country experiencing difficulties filling open positions.
    • The reports noted continued worker shortages across most sectors, especially in construction, information technology, and health care.
  • Compensation grew at a modest-to-moderate pace, similar to the last reporting period, although some contacts emphasized significant increases in entry-level wages.
  • Rate of price inflation was stable to down slightly from the prior reporting period. Districts generally saw some increases in input costs, stemming from higher tariffs and rising labor costs.
  • Reduced supply boosted prices for some agricultural goods; some Districts noted increased upward transportation pricing pressures, while others highlighted price declines due to reduced demand for shipping services.
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