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Most Fed Districts Report ‘Modest’ to ‘Moderate’ Economic Growth

Federal Reserve Beige Book [1]Modest to moderate economic growth was reported in 11 of the 12 Federal Reserve [2] Districts in the October 2014 Current Economic Conditions Beige Book [3] released on Wednesday.

Districts that reported moderate growth were Cleveland, Chicago, St. Louis, Minneapolis, Dallas, and San Francisco, while Districts that reported modest growth were New York, Philadelphia, Richmond, Atlanta, and Kansas City. The only Fed District that did not report modest or moderate growth was Boston, which painted a "mixed picture" of economic conditions. The overall economic growth reported in this month's Beige Book was similar to what was reported last month.

Several Fed Districts reported that contacts were generally optimistic about future economic growth [4]. Meanwhile, consumer spending growth ranged from slight to moderate in the 12 districts at a pace similar to the consumer spending growth reported in last month's Beige Book. While merchandise retailers in New York reported weaker sales since last month's Beige Book, this month's report indicated that most retailers were relatively optimistic about sales for the rest of the year.

Residential construction and real estate activity was mixed since last month's Beige Book. Single-family construction was sluggish in some areas of the New York District, but multi-family construction was up. Philadelphia experienced only slight home construction growth. Single-family construction starts reached their highest level of the year in Cleveland in August, though the year-to-date numbers are slightly behind last year's pace. Both single- and multi-family construction expanded in Chicago even though that district reported lower home sales and slower growth in prices. In Atlanta, which reported multi-family construction growth in much of the District, existing home sales and prices were ahead of last year's levels. San Francisco reported stable sales of single-family homes since the last Beige Book was issued in September.

Banking conditions have shown continued improvement since the last Beige Book, according to Fed. Consumer loan demand was mixed, however, with Districts citing a reduced demand for refinancing as the reason for the mixed demand in consumer loans. Credit quality remained relatively unchanged since last month's Beige Book.

Overall, employment growth was about the same as it was in last month's Beige Book, although most districts reported that employers were having trouble finding workers who were qualified for certain positions. Most Districts reported wage growth as modest, with upward wage pressures reported for some industries and/or occupations.