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Beige Book: Economy Expanding and Businesses ‘Generally’ Optimistic

March 1 – Reports from all 12 Federal Reserve Districts indicated that the economy expanded at a modest to moderate pace from early January through mid-February. Consumer spending expanded modestly since the last report. Retail sales increased at a subdued pace across most of the nation, with a number of districts noting an ongoing shift from in-store to internet purchasing.

Auto sales varied widely, but were said to be up in most districts. Tourism activity was mixed but mostly stronger. Manufacturing activity accelerated somewhat, with most districts characterizing the pace of growth as moderate. The energy sector showed modest growth in early 2017, and transportation activity was steady to somewhat higher across the nation. Home construction and sales continued to expand modestly in most districts, while residential rental markets were mixed. Home prices were steady to up modestly in most districts, and a number of districts noted low inventories of existing homes. Commercial real estate construction grew modestly, and sales and leasing activity grew moderately. Lending activity was steady to somewhat higher. Businesses were generally optimistic about the near-term outlook but to a somewhat lesser degree than in the prior report.

Employment and Wages

Labor markets remained tight in early 2017, with some districts noting widening labor shortages. Employment grew moderately in most of the nation, though three districts characterized growth as modest and two reported that it was little changed. A number of Districts noted that staffing firms were seeing brisk business for this time of year, and one noted more conversions from temporary to permanent workers. In general, wages in most districts rose modestly or moderately, with a few reporting some pickup in the pace of wage growth. A number of districts noted that shortages of skilled workers — particularly engineers and IT workers — were driving up their wages, and there were also some reports of labor shortages in the leisure and hospitality, construction and manufacturing industries.


Pricing pressures were little changed from the prior report. Most districts reported that selling prices were up modestly or moderately, though four indicated that prices had largely leveled off. Input prices were up modestly, on balance. Energy prices and farm prices were mixed but mostly steady, on balance, while prices for construction materials climbed in a number of districts. Overall, businesses said they expected both input prices and selling prices to increase modestly in the months ahead.



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