Beige Book Drivel: Dec 19 FOMC Rate Hike Decision Input

The Fed's Beige Book says the overall economy expanded at a modest or moderate pace. Labor markets tightened.

Beige Book Background

The "Beige Book" is a compilation of economic activity by each of twelve Federal Reserve districts.

It's produced roughly two weeks before the FOMC meets to discuss interest rate policy. The next rate-setting meeting is December 19.

The book is largely a compilation of all the most recent Fed regional reports (Empire State, Philly Fed, Dallas Fed, etc.)

The regional reports, which come out monthly, consist largely of anecdotal diffusion indexes that seldom match hard data industrial production numbers.

In short, there is little in the Beige Book that's of practical value. Here is the overall synopsis from the actual report.

Overall Economic Activity

Most of the twelve Federal Reserve Districts reported that their economies expanded at a modest or moderate pace from mid-October through late November, though both Dallas and Philadelphia noted slower growth compared with the prior Beige Book period. St. Louis and Kansas City noted just slight growth. On balance, consumer spending held steady – District reports on growth of nonauto retail sales appeared somewhat weaker while auto sales tended to improve, particularly for used cars. Tourism reports varied but generally kept pace with the economy. Tariffs remained a concern for manufacturers, but a majority of Districts continued to report moderate growth in the sector. All Districts reported growth in nonfinancial services – ranging from slight to strong. New home construction and existing home sales tended to decline or hold steady, while construction and leasing of nonresidential structures tended to rise or remain flat. Overall, lending volumes grew modestly, although a few Districts noted some slowing. Agricultural conditions and farm incomes were mixed; some Districts noted impacts from excessive rainfall and from tariffs, which have constrained demand. Most energy sectors saw little change or modest growth. Most Districts reported that firms remained positive; however, optimism has waned in some as contacts cited increased uncertainty from impacts of tariffs, rising interest rates, and labor market constraints.

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