Reports from the 12 Federal Reserve Districts indicated that economic activity has continued to expand since the previous report. A number of districts also noted that contacts remained optimistic about the outlook for future economic activity.
The New York, Richmond, Chicago, Minneapolis and San Francisco districts characterized their growth rates as moderate; Philadelphia and Cleveland reported modest growth; while Dallas' economy expanded at a solid pace. Kansas City reported slight growth with modest growth expected in the coming months. Atlanta noted that business activity appeared to be improving and Boston reported general increases. Growth has slowed slightly in St. Louis.
Consumer spending continued to trend higher in most districts at rates ranging from slight to moderate, with many seeing an increase in consumer confidence and some viewing lower gasoline prices as a contributing factor to higher consumer spending. Auto sales were particularly strong in Richmond, Atlanta, Chicago and San Francisco, and lower gasoline prices boosted sales of SUVs and light trucks in Philadelphia, Cleveland and Chicago. Tourism reports were mostly positive for the reporting period, with early-winter weather conditions boosting activity in Richmond and Minneapolis.
Demand for nonfinancial services rose in a number of districts, with several reporting broad-based growth in demand for staffing services. Manufacturing activity generally advanced, with most districts reporting stable to moderate growth. Automotive and aerospace industries continued to be sources of strength. New York and Atlanta are optimistic about the near-term outlook.
Since the previous Beige Book, construction and real estate activity expanded overall but saw a fair amount of variation across sectors and regions. Residential construction increased on balance across districts and multifamily construction remained stronger than single-family construction in a number of districts. Reports on residential real estate activity were mixed; about half reported an increase in home sales.
Lending activity improved on net. A few districts noted aggressive competition on loan pricing and terms or an easing of loan standards. Richmond, St. Louis and San Francisco noted an increase in credit card lending. Residential lending increased in a number of Districts, reflecting a mix of new mortgages, refinancings and home equity lines of credit. Credit standards were largely unchanged.
Agricultural conditions were mixed across the districts. Livestock operations were more profitable than a year ago, but with crop yields generally at above-average to record-high levels, lower crop prices were depressing farm incomes. Natural resource activity was strong overall, with oil and natural gas exploration, drilling and extraction remaining at high levels in five districts.
Employment gains were widespread across districts. Overall price and wage inflation remained subdued in October and November. Upward wage pressures continued to be evident for certain types of occupations and for skilled workers. Some of the higher costs associated with health care were reportedly being passed on to employees.
