The 2020 Mid-Year Economic Update_long

Federal Reserve: Economy Expands at ‘Moderate Pace’

Most Districts reported increases in manufacturing activity.

Overall economic activity expanded at a moderate pace from late February to early April, according to reports from the 12 Federal Reserve Districts in the latest Beige Book report. Most Districts reported moderate or modest growth, with New York and Dallas Districts indicating slightly accelerated expansion.

Most Districts noted increases in manufacturing activity since the previous report. Particular strength was seen in industries tied to residential construction and automobiles, while several Districts reported uncertainty or weakness in defense-related sectors.

Consumer spending grew modestly, and firms in some Districts cited higher gasoline prices, expiration of the payroll tax cut and winter weather as factors restraining sales growth.

Most Districts said residential and commercial real estate improved markedly since the last report. Home prices were rising in many areas of the country, and loan demand was steady to slightly up in most Districts.

Reports on agricultural conditions were mixed, as drought or cold weather adversely impacted some Districts while others reported a strong agricultural sector.

Oil and natural gas activity remained robust over the reporting period, with contacts in the Cleveland, Kansas City, and Dallas Districts expecting a rise in activity in coming months, while coal production continued to decline.

Employment conditions remained unchanged or improved somewhat, and reports of hiring were most prevalent in the manufacturing, residential construction, information technology and professional services sectors. Wage pressures were generally contained, although several Districts cited upward pressures in occupations experiencing labor shortages, such as information technology, construction, and engineering.

Outlooks among respondents remained optimistic across sectors and Districts, with growth mostly expected to continue at the same or a slightly improved pace. Some uncertainty remained, primarily regarding fiscal policy and health care reform.

Read the full Beige Book report from the Federal Reserve.

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