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Beige Book: National Summary

September 4, 2019

This report was prepared at the Federal Reserve Bank of Atlanta based on information collected on or before August 23, 2019. This document summarizes comments received from contacts outside the Federal Reserve System and is not a commentary on the views of Federal Reserve officials.

Overall Economic Activity
On balance, reports from Federal Reserve Districts suggested that the economy expanded at a modest pace through the end of August. Although concerns regarding tariffs and trade policy uncertainty continued, the majority of businesses remained optimistic about the near-term outlook. Reports on consumer spending were mixed, although auto sales for most Districts grew at a modest pace. Tourism activity since the previous report remained solid in most reporting Districts. On balance, transportation activity softened, which some reporting Districts attributed to slowing global demand and heightened trade tensions. Home sales remained constrained in the majority of Districts due primarily to low inventory levels, and new home construction activity remained flat. Commercial real estate construction and sales activity were steady, while the pace of leasing increased slightly over the prior period. Overall manufacturing activity was down slightly from the previous report. Among reporting Districts, agricultural conditions remained weak as a result of unfavorable weather conditions, low commodity prices, and trade-related uncertainties. Lending volumes grew modestly across several Districts. Reports on activity in the nonfinancial services sector were positive, with reporting Districts noting similar or improved activity from the last report.

Employment and Wages
Overall, Districts indicated that employment grew at a modest pace, on par with the previous reporting period. While employment growth varied by industry, some Districts noted manufacturing employment was flat to down. Firms and staffing agencies universally cited tightness across various labor market segments and skill levels, which continued to constrain growth in overall business activity. On balance, Districts reported that the pace of wage growth remained modest to moderate, similar to the previous reporting period. Districts continued to report strong upward pressure on pay for entry-level and low-skill workers, as well as for technology, construction, and some professional services positions. In addition to wage increases, some Districts noted other efforts—such as enhanced benefits offerings, work arrangement flexibility, and signing bonuses—to attract and retain employees.

Prices
On net, Districts indicated modest price increases since the last report. Retailers and manufacturers in some Districts reported slight increases in input costs. Although firms in some Districts noted an ability to pass along price increases, manufacturers relayed limited ability to raise prices. District reports on the impact of tariffs on pricing were mixed, with some Districts anticipating that the effects would not be felt for a few months.

Highlights by Federal Reserve District

Boston
Economic activity expanded at a modest pace since the last Beige Book report, although some manufacturers saw declines while tourism and the staffing sector reported strength. Commercial real estate markets strengthened on balance. Residential real estate inventories were down and contacts noted bidding wars.

New York
Regional economic growth continued at a modest pace. Job creation was sluggish, but labor markets remained tight and wage growth picked up a bit. Prices continued to rise modestly. Manufacturing activity picked up slightly. Residential rental markets firmed. Banks reported a rebound in loan demand, but the financial sector overall showed signs of softening.

Philadelphia
On balance, business activity continued at a modest pace of growth during the current Beige Book period. Contacts continued to report difficulty in finding qualified labor, and wage increases remained moderate. Still, inflation remained modest. Firms remained positive about the six-month outlook, although some expressed more caution given uncertainty.

Cleveland
On balance, economic activity was steady over the period. Consumer spending picked up, while manufacturing and freight activity slowed down. Employment remained stable overall, while wages rose moderately across the board. Prices were little changed, with contacts citing as contributing factors a lack of materials cost inflation, intense competition, and softening demand.

Richmond
The Fifth District economy continued to grow at a modest rate. Manufacturers and trucking companies saw some declines in shipments. Ports, tourism, and nonfinancial service firms generally indicated increasing activity. Residential and commercial real estate markets were stable to improving modestly. Labor markets remained tight, wages rose modestly, and prices increased at a moderate rate.

Atlanta
Economic activity moderated slightly over the reporting period. Labor market tightness persisted. Wage growth remained steady and input costs rose slightly. Retail sales and tourism activity were mixed. Real estate sales and construction were down from a year ago. Manufacturing activity softened. Banking conditions remained steady.

Chicago
Economic activity increased slightly. Consumer spending increased modestly; employment and business spending increased slightly; and manufacturing and construction and real estate were little changed. Wages and prices rose slightly. Financial conditions were little changed on balance. Farm income prospects improved some, but remained poor for most agriculture sectors.

St. Louis
Economic conditions were unchanged from our previous report. Construction activity ticked up. Barge traffic continued to improve, but air cargo traffic decreased slightly from a year ago. Farming conditions remain strained by low commodity prices and residual effects from flooding in the spring. Overall, contacts' economic outlook for the remainder of the year turned slightly pessimistic.

Minneapolis
Ninth District activity was steady overall. Labor demand remained healthy but employment was flat, as labor availability continued to constrain hiring. Manufacturing grew slightly, but contacts pointed to some signs of softening. Agricultural conditions remained weak due to poor weather during planting, while commercial construction grew strongly as firms caught up with a backlog caused by the slow start to the season.

Kansas City
District economic activity edged up in July and early August. Consumer spending increased modestly, with gains in retail, auto, restaurant and tourism sales. Real estate activity also expanded, but residential construction activity slowed. Manufacturing activity declined slightly, while activity held steady in the energy sector. The agricultural sector remained weak, with low prices and trade uncertainty weighing on farm income.

Dallas
Economic activity continued to expand moderately. Retail sales were flat and drilling activity dipped, but output growth strengthened in manufacturing. Selling price increases were modest, as most firms were limited in their ability to pass through higher costs. Hiring continued at a steady pace. Outlooks were mixed, with tariffs, trade tensions, stock market volatility, and slowing global growth driving up uncertainty.

San Francisco
Economic activity in the Twelfth District continued to expand at a moderate pace. The labor market remained tight and wage growth was moderate. Price inflation was largely stable. Sales of retail goods increased notably, as did activity in the consumer and business services sectors. The manufacturing and agricultural sectors slowed somewhat. Activity in residential and commercial real estate markets expanded moderately, and lending grew further.