Will ‘Modest’ Economic Growth Deter the Fed?

All eyes are on economic data as the country waits to see if the Federal Reserve will raise the federal funds target rate later in June. A rate hike is widely anticipated by economists and analysts; the latest economic data reported by the Fed, however, may put the rate hike on hold at least until late July.

According to the Federal Reserve’s latest Beige Book released on Wednesday, most of the Fed’s 12 Districts reported only modest economic growth from April through mid-May, the period covered by the Beige Book. Only San Francisco reported moderate economic growth, while modest growth was reported in Philadelphia, Cleveland, Atlanta, Chicago, St. Louis, and Minneapolis. Kansas City and Chicago reported slower economic growth, Dallas reported marginal economic growth, and New York reported generally flat economic activity since the previous Beige Book was issued six weeks earlier.

The Fed reported moderately increased residential real estate activity across most Districts with strong home sales in Boston, Cleveland, Kansas City, and San Francisco. Though residential sales were somewhat lower in other districts, sales were generally reported as positive, according to the Fed.

Lower housing inventories, which have been an issue for the housing industry for the greater part of four years now, were reported by contacts in the New York, Cleveland, Atlanta, St. Louis, and Minneapolis Districts, according to the Fed. The lower inventory in those districts led to bidding wars in the Richmond District and at the same time constrained home sales in Philadelphia, the Fed reported. Home prices generally increased across all districts, with Cleveland reporting a 3 percent rise in home prices.

The next big economic report to watch will be the May Employment Situation, which will be released by the Bureau of Labor Statistics on Friday morning, June 3, at 8:30 a.m. EST.

Click here to see the entire Beige Book.