A compilation of anecdotal evidence on economic conditions in the twelve Federal Reserve districts said Wednesday that U.S. economic activity expanded at a modest to moderate rate over the past several weeks.
The Fed report, known as the Beige Book, also said most continue to expect modest economic growth in the near term but noted potential risks from the coronavirus outbreak and the upcoming presidential election.
While a majority of Fed districts reported modest to moderate growth, the central bank said the St. Louis and Kansas City Districts reported no change during the period.
The Beige Book also said consumer spending generally picked up but noted growth was uneven across the nation, including mixed reports on auto sales.
Meanwhile, the report said there were indications the coronavirus was negatively impacting travel and tourism in the U.S., with growth in tourism described as flat to modest.
The coronavirus also contributed to some supply chain delays in the manufacturing sector, leading to concerns among producers about further disruptions in the coming weeks.
The Fed said employment increased at a slight to moderate pace, overall, with hiring constrained by a tight labor market.
Wage growth was also described as modest to moderate in most Fed districts, as the tight labor market and minimum wage increases put upward pressure on wages.
On the inflation front, the Beige Book said most districts reported modest growth in selling prices as well as non-labor input prices.
While some firms were optimistic the phase one U.S.-China trade deal would reduce goods prices, some still struggled with tariffs and were concerned about how the coronavirus might affect prices.
The Beige Book is typically released about two weeks before the Fed’s next monetary policy, with the next meeting scheduled for March 17-18.
However, the Fed announced a surprise interest rate cut earlier this week, lowering rates by 50 basis points to 1 to 1-1/4 percent in the first inter-meeting move since the 2008 financial crisis.
The Fed said the fundamentals of the U.S. economy remain strong but noted the coronavirus poses evolving risks to economic activity.
The central bank was widely expected to wait until the meeting later this month to announce the rate cut, with some analysts suggesting the Fed could cut rates again at the meeting.
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