Fed's Beige Book said economic activity "continued to expand at a modest pace."
Fed's Beige Book said economic activity "continued to expand at a modest pace." The report, prepared by the SF Fed and used data collected on or before July 8, added that there was little changed versus the prior reporting period. Retail sales increased in most Districts, though vehicle sales were flat. Also, activity in nonfinancial services rose further. Manufacturing was generally flat, though a few Districts noted a modest pick up. Tourism was "broadly solid." The Fed also reiterated employment grew at a "modest pace, slightly slower than the previous reporting period. Labor markets remain "tight" with continued worker shortages. There were some concerns about securing and renewing visas. Compensation grew at a "modest-to-moderate" clip, with most Districts reporting expanded benefit packages. Price inflation was "stable to down slightly" versus the last reporting period. Districts mostly saw "some increases in input costs, stemming from higher tariffs and rising labor costs. However, firms' ability to pass on cost increases to final prices was restrained by brisk competition. Reports on transportation costs were mixed, while "prices for professional and business services fell slightly, and steel and lumber prices softened due to lower demand." And the Beige Book concluded, "The outlook generally was positive for the coming months, with expectations of continued modest growth, despite widespread concerns about the possible negative impact of trade-related uncertainty." Despite this rather positive outlook, the FOMC will be cutting rates on July 31, due to weak inflation and slowing global growth amid myriad uncertainties.