In New York and Dallas growth was flat, while Kansas City had a modest decline. The latest iteration showed improvement in consumer spending, nonfinancial services activity, home sales, loan demand and job growth across the country.
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Manufacturing activity, meanwhile, was flat, with “many districts reporting that the strengthening dollar and weakening global outlook had negatively affected worldwide exports”.
A key report about the USA economy released Wednesday offered a relatively somber take on the US economy, bolstering the view of many that the Federal Reserve will be slow to raise interest rates further this year.
The mixed outlook comes a few weeks ahead of the next Federal Reserve meeting to discuss policy, slated for March 15 and 16.
The Fed is expected to keep interest rates unchanged at a range of between 0.25 percent and 0.5 percent at that gathering.
The latest Fed report “was marginally weaker in tone than January’s”, said Dana Saporta, an economist at Credit Suisse.
In Dallas, while the overall effects from energy-sector weakness appeared to be contained, “contacts said they were guarded about 2016 growth prospects due to additional uncertainty from financial markets and monetary policy”.
The Fed survey found that while consumer inflation was holding steady, wage growth varied considerably from flat to strong. In seven districts, employers reported difficulty finding skilled workers.
“On net, 56 percent of contacts reported that wages during the past three months were slightly higher or higher than during the same time last year, the strongest reading in the past two years”, the St. Louis Fed reported.
Fed officials are looking for signs of the economy’s resilience before raising rates again. n testimony to Congress in mid-February, Fed Chairwoman Janet Yellen did not rule out a March rate increase, but said that “foreign economic developments, in particular, pose risks to US economic growth”. Most districts reported prices remained steady. The U.S. labor market has managed to generate 64 consecutive months of job growth, though January’s creation numbers clocked in at an underwhelming 151,000.
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The Beige Book was compiled by the Kansas City Fed with information collected before February 22, 2016. Excluding food and energy, inflation was up 1.7%, the strongest increase since July 2014 and one that puts inflation closer to the Fed’s 2% target.
