There was something bizarre in yesterday’s latest Beige Book: it painted an unexpectedly strong picture of the economy. Here, again, are the key points we pulled from the summary of various regional Feds’ takes on the current state of the US economy:
- In most Districts, sales of retail goods increased slightly overall,
- Activity in the nonfinancial services sector rose further
- Tourism activity was broadly solid, with Atlanta and Richmond recording robust growth in this sector,
- Some Districts continued to report healthy expansion in the transportation sector.
- Home sales picked up somewhat, but residential construction activity was flat.
- Nonresidential construction activity increased or remained strong in most re-porting Districts, and commercial rents rose
- A modest pickup in manufacturing activity since the last reporting period was observed in a few Districts
- Increased demand for loans was broad-based, with all but two Districts noting some growth in financing activity
- Employment grew at a modest pace, as labor markets remained tight; contacts across the country experiencing difficulties filling open positions.
- The reports noted continued worker shortages across most sectors, especially in construction, information technology, and health care.
- Compensation grew at a modest-to-moderate pace, similar to the last reporting period, although some contacts emphasized significant increases in entry-level wages.
- Rate of price inflation was stable to down slightly from the prior reporting period. Districts generally saw some increases in input costs, stemming from higher tariffs and rising labor costs.
- Reduced supply boosted prices for some agricultural goods; some Districts noted increased upward transportation pricing pressures, while others highlighted price declines due to reduced demand for shipping services.
But why good news bizarre? Because as NY Fed president John Williams made clear today, not only is the Fed cutting in July, but the Fed will likely continue cutting until we get back to ZIRP again:
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