Highlights
The Beige Book prepared by regional Fed banks for the upcoming October 30-31 FOMC meeting indicates that economic growth remains positive but clearly is slowing. According to the Fed contacts for the Beige Book, consumer spending is expanding but at an uneven and slower pace than in August. Housing continues to decline while commercial real estate remains healthy. Importantly, most contacts see little spillover effect from the recent credit crunch but remain cautious. While job growth has eased, labor shortages remain in a number of occupations. Yet, wage growth is moderate except for "workers in short supply." Manufacturing is still expanding but has been hurt by the housing recession. Export strength has helped, however. On the inflation front, "upward pressure on input costs" was reported by most Districts due to higher energy and raw materials costs. Notably, the Beige Book points out that the weaker dollar "has made imported goods more expensive." But manufacturers are having difficulty passing higher costs on to the consumer due to competition. Food prices are reported higher while service sector inflation has not accelerated.

The latest Beige Book adds to the Fed's conundrum of facing weakening economic growth combined with higher food and energy prices creating inflation pressures. With housing slumping more than most expected and consumers beginning to retrench, the Fed will be relying on its forecasts for inflation and real growth when making its interest rate decision more so than relying just on actual data. The balance is tipping more toward economic growth being a concern but inflation is being obstinately high.

2007 Release Schedule

Released On: 1/17 3/7 4/25 6/13 7/25 9/5 10/17 11/28 Released For: Dec Feb Mar May Jun Aug Sep Oct