WASHINGTON—Economic activity in the 12 Federal Reserve districts expanded at a “modest to moderate pace” in January and February, according to the Federal Reserve Beige Book.
NAFCU continues to believe the Fed will raise rates in a couple weeks, said Chief Economist and Vice President of Research Curt Long.
"The Fed's latest report of economic conditions repeats the familiar refrain of emerging wage and price pressures," Long said. "Although the report downplays the impact of wage hikes in response to recent tax cuts, the tight labor market is prompting employers to bid up salaries and benefits. NAFCU continues to expect the Federal Reserve to raise interest rates by one-quarter point when the rate-setting committee meets in two weeks."
Key points from the Beige Book, according to Long:
- Consumer spending was mixed – non-auto retail sales increased in more than half of the districts while auto sales were flat or declined in all 12 districts
- There was modest growth in home sales and construction, though the latter continues to be constrained by a lack of labor and materials
- Employment grew at a moderate pace, however, there continues to be constant "labor market tightness and brisk demand for qualified workers"
- Employers raised wages and expanded benefit packages throughout most the districts in response to the current labor market conditions
- Prices increased in all the districts with moderate inflation