Fed's Beige Book Says U.S. Economic Activity Increased Slightly
The Federal Reserve released its Beige Book on Wednesday, with the report indicating overall economic activity in the U.S. increased slightly in early 2023.
The Beige Book, a compilation of anecdotal evidence on economic conditions in each of the twelve Fed districts, said six districts reported little or no change in economic activity since the last report, while six indicated economic activity expanded at a modest pace.
The Fed said consumer spending generally held steady, although a few districts reported moderate to strong growth in retail sales during what is typically a slow period.
Several districts indicated that high inflation and higher interest rates continued to reduce consumers’ discretionary income and purchasing power, the Beige Book added.
The report noted inflationary pressures remained widespread, although price increases moderated in many districts.
“Some districts noted that firms were finding it more difficult to pass on cost increases to their consumers,” the Fed said.
With regard to the labor market, the Beige Book said conditions remained solid, with employment continuing to increase at a modest to moderate pace in most districts despite hiring freezes by some firms and scattered reports of layoffs.
The Fed said labor markets generally remained tight, although a few districts noted that firms are becoming less flexible with employees and beginning to reduce remote work options.
The Beige Book is typically released two weeks ahead of the Fed’s next monetary policy meeting, with the next meeting scheduled for March 21-22.
CME Group’s FedWatch Tool currently indicates an 80.8 percent chance of a 50 basis point interest rate increase and a 19.2 percent chance of a 25 basis point rate hike.
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