This book is produced roughly two weeks before the monetary policy meetings of the Federal Open Market Committee. On each occasion, a different Fed district bank compiles anecdotal evidence on economic conditions from each of the 12 Federal Reserve districts. Why Investors Care
Highlights
The Beige Book prepared by regional Fed banks for the upcoming June 27-28 FOMC meeting, for the most part described economic growth as "modest or moderate" in most Federal Reserve Districts. Consumer spending was up in late April and May. Housing remained weak but commercial real estate was seen as strengthening. Hiring activity picked up but did not translate into higher wage pressures. Prices were reported up for energy and selected raw materials. Most Federal Reserve Districts indicated that manufacturing was up but growth varied by industry group. Machinery and equipment manufacturers were generally strong while manufacturers supporting housing were weak.
The latest Beige Book reports very moderate conditions other than somewhat tight labor markets. Even the tight labor markets generally are not pushing up wage pressures. While the report does not give solace to those wishing for an early interest rate cut, it also does not create the impression of a runaway economy. This report keeps the Fed on hold but should relieve some concerns that the economy may be too hot. Bonds and equities should like the report.
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