The Beige Book's long refrain of modest-to-moderate growth is a bit more modest than moderate in the edition prepared for the December 18 & 19 FOMC. Though most of the 12 Fed district are in the modest-to-moderate camp, Kansas City and St. Louis are reporting slight growth with Philadelphia and Dallas, the latter having reported robust growth in the prior Beige Book for October, both reporting slowing growth.
The labor market continues to tighten according to the report though most of the 12 districts are reporting employment growth on the slower side of modest-to-moderate in contrast to wage and benefit growth which are on the higher side of modest-to-moderate. Over half of the districts say the inability to find quality labor is limiting business expansion. Inflation is said to be rising modestly which marks slight slowing from the October report when modest-to-moderate was the verdict.
Consumer spending was described as modest in the October report and now is described as holding steady with auto sales improving but with growth in non-auto sales described as "somewhat weaker" which is not a positive indication for the holidays. Manufacturing was in the moderate class in the last report where it stays in this report with tariffs remaining a concern. For services, growth is mixed across the districts, from slight to strong.
Both new home sales and resales are mixed to down while nonresidential construction is mixed to up. Agricultural conditions and farm incomes, constrained by excessive rainfall and tariffs, are once again mixed. Energy is steady to growing modestly. Tourism is varied but is also growing modest to moderately. Lending is growing modestly although a few districts noted slowing.
The Beige Book is always less robust than the FOMC's assessment at the time of the meeting but today's report does mark a very slight downgrading, whether in the economic assessment, the description of employment growth, or the state of inflation. These results are in line with Jerome Powell's message last week that there may be fewer than more rate hikes to come. Cut-off date for today's report, which was compiled by the Philly Fed, was November 26.