1 week ago
Economic Indicators

Beige Book: U.S. Growth Cools Amid Government Shutdown, Polar Vortex

Investing.com - The U.S. economy cooled as pressures from the government shutdown, the polar vortex and the higher cost of

Investing.com - The U.S. economy cooled as pressures from the government shutdown, the polar vortex and the higher cost of credit kept a lid on growth, a Federal Reserve survey showed.

The central bank’s Beige Book economic report, based on anecdotal information collected on or before Feb. 25, highlighted that while most Districts reported "slight-to-moderate" growth, "about half of the Districts noted that the government shutdown had led to slower economic activity in some sectors."

The report also offered an assessment on the health of the consumer following the weaker retail sales data reported last month.

"Consumer spending activity was mixed across the country, with contacts from several Districts attributing lower retail and auto sales to harsh winter weather and to higher costs of credit."

On inflation and the labor market, which together form part of the Fed's dual mandate, the Beige Book noted "labor markets remained tight for all skill levels" and "prices continued to increase at a modest-to-moderate pace."

Ahead of the crucial nonfarm payroll data due Friday, in which wage growth is expected to come into focus, the report said most Districts were reporting an uptick in wages as businesses compete for talent.

"Wages continued to increase for both low- and high-skilled positions across the nation and a majority of Districts reported moderately higher wages. In addition, contacts in about half of the Districts noted rising non-wage forms of employee compensation, including bonuses, relocation assistance, vacation time, and flexible work arrangements."

The struggles in the U.S. housing market persisted as residential home sales were "generally lower," even as construction activity remained steady, the report said.

"Several real estate contacts noted that inventories had risen slightly but remained historically low, while home prices continued to appreciate but at a slightly slower pace. Agricultural conditions remained weak, and energy activity was mixed across Districts."