Fed's Beige Book Reports Modest Growth, Trade Worries--2nd Update
July 17 2019 - 3:18PM
Dow Jones News
By David Harrison and Paul Kiernan
American businesses see economy activity expanding modestly amid
lingering fears over trade, according to a Federal Reserve report
released Wednesday.
"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,"
said the Fed's "beige book" survey, a report of anecdotes drawn
from business contacts around the country by the central bank's 12
regional banks.
The report should reassure Fed officials that the economy is in
little danger of tipping into recession anytime soon. Despite a
healthy economy, Fed Chairman Jerome Powell signaled in
congressional testimony last week that the central bank was ready
to cut interest rates -- perhaps as soon as the July 30-31 meeting
-- because of concerns about slowing global growth and trade
tensions.
Businesses pointed to consumer spending as a strong point,
despite flat vehicle sales. Home improvement stores in Oregon saw
sales rising moderately, and a major apparel company based in the
state said it expected demand to remain healthy. Retail sales have
been rising for four straight months, according to the Commerce
Department.
Tourism-industry participants were generally upbeat as well,
except on Cape Cod where 20 days of rain in June dampened spirits.
In Delaware, business contacts said traffic was "massive" over the
July Fourth holiday with long waits for restaurants on a Tuesday
night.
Manufacturers continued to express concern about the uncertainty
surrounding trade negotiations. A maker of electronic components in
the Northeast said it had laid off people in response to tariffs
and moved an assembly line from the U.S. to Germany, where it could
receive Chinese imports without paying tariffs.
Businesses continued to complain of shortages of worker. Some
construction companies in Idaho debated relaxing drug testing for
applicants. Wages grew at a modest-to-moderate pace, the report
said, with some employers expanding benefit packages to draw
workers.
Inflation pressures were slightly weaker from the previous
reporting period, the report said. Some respondents noted
competitive pressures prevented them from passing on increases in
input prices.
Agricultural producers in the Midwest continued to suffer the
consequences of spring floods. Many farmers in the Chicago area
said it was too late to plant corn and soybeans, forcing them to
plant less-profitable crops and file for insurance claims.
"I have been farming for 48 years no and this is the worst
spring/summer planting season we have experienced," said an Indiana
contact.
Write to David Harrison at david.harrison@wsj.com and Paul
Kiernan at paul.kiernan@wsj.com
(END) Dow Jones Newswires
July 17, 2019 15:03 ET (19:03 GMT)
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