The economy continued to expand in most regions of the country in May and early June, but there are signs of a slowdown, the Federal Reserve said Wednesday (June 14) in the Beige Book report on economic conditions.
CBS MarketWatch reported that the Fed said price pressures were rising in most regions while wage pressures were said to be moderate.
“Economic activity continued to expand” in all 12 Federal Reserve districts, “but there were signs of deceleration,” the Beige Book said.
In most regions, the economy could be summed up simply as “Healthy, but …”
The Beige Book was compiled by the professional staff at the Dallas Federal Reserve Bank from information received from thousands of business contacts around the nation. The Beige Book is prepared to guide Fed officials in their deliberations about interest rates on June 28 and 29; it does not represent the views of any Fed official.
The Federal Open Market Committee (FOMC) is expected to raise its overnight lending rate by a quarter percentage point to 5.25% on June 29, although Fed officials have been of two minds about the economy.
On the one hand, inflation is higher than the Fed would like. That argues for still higher interest rates.
On the other hand, the economy appears to be slowing, an argument for a pause or a halt in interest-rate hikes to assess the impact of 16 increases in the Fed’s target rate over the past two years.
The Beige Book highlighted both worries.
“Concerns about high or rising costs were expressed by business contacts across the country,” the Beige Book said.
“Reports of costs being passed forward varied considerably but were more prevalent than in the last Beige Book,” the report said. Nonetheless, the report said there were few reports that “these increases were reaching the retail level.”
Even reports of strength were hedged. “The manufacturing sector continued to expand quite strongly, but with more reports of softening,” the Fed said.