WASHINGTON—While economic activity was little changed from the previous reporting period, all but two Federal Reserve districts reported increased loan demand and growth in financing activity from mid-May through early July according to the latest Fed Beige Book data.
"The tenor of the Fed's latest Beige Book is a positive one, and answers critics of previous rate increases," said NAFCU Chief Economist and Vice President of Research Curt Long. "It surmises that there is a bit more heat in the economy than those critics would suggest. Wage growth and inflation have been lower than expected because, respectively, employers have been ramping up benefits and companies are facing heightened competition.
"With markets having fully priced in a rate cut later this month, this report seems designed to temper expectations for further easing this year," Long added.
The Beige Book also showed optimistic outlooks from the districts, though there are still concerns about the negative impact of trade-related uncertainty.
Worth Noting
Of note in the latest Beige Book’s findings:
- Labor markets remained tight, with contacts across the country experiencing difficulties filling open positions
- Most district reports also noted that employers expanded benefit packages in response to the tight labor market conditions
- The 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; however, firms' ability to pass on cost increases to final prices was restrained by brisk competition
Based on recent economic reports, Long still anticipates the Federal Reserve Open Market Committee will cut rates by 25-basis points during its meeting later this month.