|
Beige Book hints slowing
|
 |
November 3, 1999: 2:47 p.m. ET
Economy still running strong, but exhibiting a few signs of slowing: Fed
|
NEW YORK (CNNfn) - The U.S. economy continues to exhibit signs of resilient strength, though some consumer spending and borrowing are tapering off, suggesting slower growth may be on the way, the Federal Reserve said Wednesday.
In its latest survey of the U.S. economy, the central bank said labor markets remain strong, leading to pressure on employers to raise wages to attract and retain workers. At the same time, it said, overall prices remain tame, indicating few concerns about inflation.
"Most districts continue to report strong economic growth but some slowing is noted," the report said. "Labor markets remain tight across the country, with numerous districts reporting continued difficulty in finding and retaining qualified workers."
The Fed's "Beige Book" is a survey of the economy conducted eight times a year and released two weeks before each of its monetary policy meetings. The report is generally used as a reference for officials in their deliberations about monetary policy and interest rates.
For the most part, analysts and economists have been divided on whether the Fed will move to raise rates a third time this year to slow the pace of the economy, now about to enter its ninth year of uninterrupted expansion.
While many indicators suggest robust growth, only a smattering of evidence exists that inflation -- the nemesis of the financial markets and the Fed -- is showing signs of accelerating.
That could convince Fed officials to hold off raising rates at their Nov. 16 policy meeting. The Federal Open Market Committee has voted to raise rates twice this year, a quarter point each on June 30 and Aug. 24, to cool the economy and keep inflation under wraps. The Fed's trend-setting fed funds rate currently is 5.25 percent.
One wild card could present itself in October's employment report, to be released on Friday. Analysts polled by Reuters anticipate that 317,000 jobs were added to the economy last month, leaving the jobless rate unchanged at 4.2 percent.
If Friday's report shows even more evidence that wages are rising, the Fed "will probably need to do something pro-active, and that would probably mean 25 basis points now and then something in the first quarter of next year," said Art Hogan, chief market strategist at Jeffrey & Co. in Boston.
Other areas of the economy also showed signs of strength, particularly in retail sales, manufacturing and construction, the report said.
"Real estate and construction are still robust in most districts, though there are signs of some moderation in activity," it said. "Most districts report that residential and nonresidential construction is constrained by labor shortages and higher prices on some construction supplies."
It also noted that manufacturing activity remained strong, with much of the demand coming from Asia.
The report, compiled this time by the Federal Reserve Bank of Minneapolis, is a compilation of views and statistics from all of the Fed's 12 district banks. Each of the district banks takes a turn at compiling the report throughout the year.
|
|
|
|
|
|
Federal Reserve
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
