The May 2016 Beige Book from the Federal Reserve
- Price pressures grew slightly in most districts
- Employment and wages grew modestly
- Tight labor market widely noted
- Consumer spending up modestly in many districts
- Reports from 12 districts mostly described modest economic growth
- Energy sector remains weak
- Contacts in several districts 'generally optimistic'
- Loan demand up moderately in many districts
- Manufacturing was mixed
- This Beige Book was based on information collected before May 23 by the Minneapolis Fed.
The Fed will use this anecdotal report on the strength of regional economies at the June 15 FOMC decision.
The Fed is looking for signs of a pickup in growth but I don't see it here.
This is the opening paragraphs:
"Information received from the 12 Federal Reserve Districts mostly described modest economic growth since the last Beige Book report. Economic activity in April through mid-May increased at a moderate pace in the San Francisco District, while modest growth was reported by Philadelphia, Cleveland, Atlanta, Chicago, St. Louis, and Minneapolis. Chicago noted that the pace of growth slowed, as did Kansas City. Dallas reported that economic activity grew marginally, while New York characterized activity as generally flat since the last report. Several Districts noted that contacts had generally optimistic outlooks, with firms expecting growth either to continue at its current pace or to increase.
Consumer spending was up modestly on balance in many Districts, though contacts in the Boston, Cleveland, Minneapolis, and Dallas Districts reported mixed or flat activity, and New York reported weakened sales. Many Districts reported modest growth in nonfinancial services. Manufacturing activity was mixed across Districts. Construction and real estate activity generally expanded since the last report, and the overall outlook among contacts in these industries remained positive. Overall loan demand was up moderately in all but one of the Districts that reported it, and many Districts reported steady to good credit availability. Crop conditions were promising in many Districts, but low commodity prices continued to put pressure on agricultural incomes. The energy sector remained weak. Employment grew modestly since the last report, but tight labor markets were widely noted; wages grew modestly, and price pressure grew slightly in most Districts."
The comment on the tighter labor market is notable but at this point that's largely accepted (at the Fed). The questions are on the pickup in growth and inflation and there is nothing here that argues for hiking soon.