Fed’s Beige Book Shows Moderate Or Modest Growth In Most Regions

Date: January 15, 2016

Economy Continued To Show Uneven, Sluggish Recovery In Q4 2015

The Federal Reserve has released its latest Beige Book economic survey. Overall, sources are reporting that the Beige Book indicated “moderate” or “modest” growth in most Districts, as well as improved loan demand and credit quality. Consumer spending, housing, and commercial construction generally improved, while the energy and manufacturing sectors weakened in most Districts. Bloomberg News reported that the Beige Book found the US economy “expanded across most of the country in the past six weeks.” Two of the 12 Fed Districts reported “moderate” growth and seven reported “modest” growth. Boston was “upbeat,” and New York and Kansas City were “essentially flat.” The Beige Book stated that there was continued improvement in labor markets, though wage and inflation saw “little overall change.” The AP clarified that Atlanta and San Francisco described “moderate” growth, while “Philadelphia, Cleveland, Richmond, Chicago, St. Louis, Minneapolis and Dallas” reported “modest” expansion. Reuters reported that although the labor market improved and most Districts saw growth in consumer spending, manufacturing sectors in most Districts weakened, with several – particularly Philadelphia and San Francisco – citing the strong dollar’s effect on global demand. The energy sector also reportedly “struggled further” with falling oil prices. Similarly, the Wall Street Journal reported that economists welcomed the news of a general uptick in growth, with consumer spending, housing, and commercial construction improving in most areas. However, economists also indicated concerns about persistent stress in sectors such as manufacturing, oil and gas, and agriculture.

What This Means For Small Businesses

The Fed’s data coincides a bit with the NFIB’s latest Small Business Economic Trends report, which showed that optimism among small business owners was slightly higher in December, though still below overage. The Small Business Optimism index rose 0.4 points in December to 95.2, under the 42-year average of 98. Still, the news is less than positive. NFIB Chief Economist William Dunkelberg said of the current economic situation, “Below average growth for small businesses has not been offset by strong growth in large firms.” Additionally, “with the manufacturing sector in decline, large firms aren’t likely to add as much to growth in 2016.”

Additional Reading

MarketWatch also covered the story.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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