The Beige of Reason
1/15/2015
By Jennifer Coombs
The Fed’s Beige Book for January 2015 indicated that economic activity continued to expand at a "modest" or "moderate" pace of growth. Overall, economic growth continued at a modest pace, but with wage and price inflation rather sluggish. We note that there doesn’t appear to be any reason for policymakers to rush into a rate rise anytime soon. Over the coming months, most districts can expect a faster pace of business contracts. Though retail sales appeared to be weaker in December, consumer spending actually increased in most Fed Districts with modest gains in year-over-year sales. Auto sales in particular showed moderate to strong growth while travel and tourism activity picked up as well. The demand for nonfinancial services increased all districts while manufacturing also expanded. Single-family residential real estate and construction was largely flat while commercial real estate activity expanded. We would like to see the level of residential sales improve this year. Prices increased slightly across all districts while payrolls expanded and wage pressures remained limited to workers in specialized fields. In manufacturing, Philadelphia noted a slowdown in activity which is disappointing compared to the district’s strong report over the last two months. Credit quality remains generally good, while demand for credit from businesses and individuals grew slightly for the period.
In the table below are some noteworthy datapoints on the individual Fed Districts. The next Fed Beige Book will be released on March 4, 2015. How did your Fed district do?
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Federal Reserve Beige Book – January 2015
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Atlanta
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Boston
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Chicago
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Cleveland
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Economic conditions improving with positive outlook in early 2015; holiday sales solid; auto sales solid; residential housing flat with home prices appreciating; existing home sales flat; manufacturing improving; job gains across most sectors; only mild cost pressures
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Sales ahead of year-ago levels in manufacturing, retail, advertising, and consulting sectors; real estimate market improving; residential real estate prices increase while sales decline; manufacturing and retail not increasing employment; cost pressures varied; 2015 overall outlook positive
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Growth remains moderate; similar pace expected in 2015; consumer spending, business spending and manufacturing all increased moderately; construction and real estate increased modestly; credit conditions stable; prices little changed except energy and some ag
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Modest grow over last 6 weeks; overall outlook positive with demand levels to rise or remain same; manufacturing showed modest growth; residential market stable; holiday retail spending slightly higher; shale gas activity high; freight strong but capacity issues; credit demand moving higher
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New York
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Richmond
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Kansas City
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St. Louis
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Moderate growth since December; cost pressures further abated; some increased wage pressures; selling prices stable; labor conditions improving at end of 2014; retail sales somewhat disappointing; auto sales sluggish; housing markets mixed; increased loan demand; delinquency rates up for residential mortgages
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Modest expansion; manufacturing improving with higher shipments and new orders; retail sales growing moderately; tourism normal; loan demand slightly higher; real estate activity mild; coal production low; ag seasonally slower; natural gas production up; overall prices slightly higher; wages slowing but employment up
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Slight growth over December with positive growth outlook; consumer spending slower in retail, auto and tourism but expected to rise in coming months; manufacturing activity slightly higher with moderate expansion of factory production; real estate edging up; ag conditions favorable; wages and prices slightly higher; energy sector weak
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Economic growth slightly faster than last month; holiday sales much higher year-over-year; auto dealers positive; manufacturing and services positive; real estate markets weak; commercial and industrial markets mixed; lending increased among the smaller banks.
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Dallas
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Minneapolis
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Philadelphia
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San Francisco
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Expansion at slower pace; manufacturing higher; retail and auto sales higher; loan demand picked up; home sales and leasing activity strong; demand for oilfields weaker; employment steady with some layoffs; much more uncertainty about outlook and less optimism due to declining oil prices
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Modest pace in last 6 weeks; increased activity in consumer spending, services, manufacturing, and non-energy mining; tourism flat; mixed in commercial real estate/construction and ag; activity down in energy, residential real estate/construction; wage growth modest; overall prices are modest
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Business activity modest few changes among sectors; manufacturers modest growth; tourism activity slowed; residential builders slight decline in contracts; little change in existing home sales; lending volumes grew modestly, credit quality improving; slight increase in wages, home prices and price levels. 6-month outlook positive
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Economic activity improved moderately; price and wage inflation modest; retail sales and demand for services increased moderately; manufacturing activity up overall; agricultural conditions mixed; real estate advanced, mainly in commercial construction; lending activity mixed.
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Jennifer Coombs
Wall Street Strategies
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