The Federal Reserve’s Beige Book economic roundup this week illustrated an economy improving and a pace of growth quickening. Reports from the 12 Fed Districts found, overall, a “modest to moderate” expansion since the Beige Book release just short of two months ago. Importantly, consumer spending is up, perhaps foreshadowing an uptick in all-important confidence.
However, two key districts – Boston and Chicago – showed much slower growth amid its industries that are more sensitive to ongoing problems with Congress and the Obama Administration simply not being able to work through issues like the budget/debt/”Sequestration.” San Francisco performed better than the two previously mentioned districts, but has some similar concerns of note.
Also threatening potential spring growth of the St. Louis and Kansas City regions is continued uncertainty within the agricultural sector. Both districts are heavily dependent on it, and optimism for a strong crop year, especially in a Kansas City district struggling with drought conditions, doesn’t seem to be especially high.
Still, the majority of district had much more positive news than negative on expansion in areas including sales (especially automotive), demand for services (notably technology and logistics-based), residential real estate, manufacturing (albeit modestly), labor market conditions and post-Hurricane Sandy reconstruction (New York and Philadelphia districts, primarily). To keep the overall good news rolling and growth pace accelerating though, the U.S. government is going to have to find ways to avoid the type of brinksmanship that has been all the rage on Capitol Hill over the last few years, NACM Economist Chris Kuehl, PhD hinted:
“In general, the Beige Book report holds that the economy is doing relatively well, but the stress in each report is that conditions would be far better were it not for the anchor of the budget crisis. The uncertainty factor is still a big concern nationwide.”
-Brian Shappell, CBA, NACM staff writer