By Yali N’Diaye
WASHINGTON (MNI) – The U.S. economy continued to expand at “a
modest to moderate pace from mid-February through late March,” according
to the Federal Reserve’s report on current economic conditions released
While the ‘Beige Book’ reported that the near-term outlook was
“encouraging” for household spending and that manufacturers showed
“optimism” as well, gas and petroleum prices were a source of concern.
Likewise, while “overall price inflation was modest,” the beige
book noted that “contacts in many Districts commented on rising
transportation costs due to higher fuel prices.”
On the employment front, “Hiring was steady or showed a modest
increase across many Districts,” the report said, noting that upward
pressure on wages was constrained” once again.
And as banks are about to release their earnings for the first
quarter, the beige book prepared by the Federal Reserve Bank of
Cleveland with information collected through April 2 reported that
banking conditions were “largely stable.”
In fact, the report noted “some improvement” in demand for loans as
well as improving credit quality in several districts.
“Some improvement” was also noted in the housing market, where
construction of multi-family housing expanded.
In the nonresidential sector, activity “increased or held steady,”
the report said.
Overall, five districts reported that activity grew at a “moderate”
pace from mid-February through late March, two reported modest growth
and two reported “improving” conditions.
New York said that activity “picked up somewhat”, Minneapolis
reported a “solid pace,” and Kansas City a “faster pace.”
The manufacturing sector mostly continued its expansion, the beige
However, despite the optimism about the short-term prospects in
many districts, manufacturers “are somewhat concerned about rising
Still, the report noted gains in auto and high-technicology
This is in line with the “stronger or strengthening” auto sales
reported by most districts in late February and early March.
In fact, overall prospects are “encouraging” for household spending
in the near term.
Here too, however, “contacts in several districts expressed
concerns that rising gas prices could limit discretionary spending in
the months to come.”
Higher fuel prices are also an issue to watch when looking at
transportation costs in the context of inflation.
For now, the report said, “Overall price inflation was modest.”
Higher gas and fuel prices did not prevent tourism activity from
improving in most districts, although Atlanta, for instance, “expressed
concern over high fuel prices as a possible drag on leisure spending.”
In other areas, the beige book said agricultural conditions were
generally “favorable.” It added that “Mining activity expanded and oil
extraction rose, while natural gas drilling slowed.”
** MNI Washington Bureau: 202-371-2121 **