The Fed’s Beige Book was released this evening, a region-by-region review of the US economy, and the report suggests conditions continue to improve, albeit at a constrained pace. The pace of improvement in business activity was described as being ‘modest to moderate’, which is no different to the previous quarter, while most of the 12 Federal regions reported a rise in consumer spending, manufacturing and demand for services since the last report.
Hiring in most industries was either steady or improving compared to the prior quarter, and inflation appears to be under control. ‘Upward price pressures remained subdued, and prices increased slightly during the reporting period. Wage pressures continued to be modest overall,’ according to the report. Consumers continue to show caution in their purchases and remain highly price-sensitive, however.
I don’t think this changes the complexion a great deal in terms of the Fed’s decision making. The report suggests economic growth remains on track, which would lean toward some tapering at this month’s FOMC meeting, although that eventuality is likely at least partially priced into the stock market by now.
Tomorrow we have jobless claims and the ADP employment report, the latter of which may provide an early feel for Friday’s important non-farm payrolls.