The latest Beige Book from the Federal Reserve Book shows an economy that has slowed considerably over the past couple months. Overall, the economy continues to grow, but at a much slower pace, with some regions doing better than others. In addition, many businesses have “become more cautious about their near-term outlooks” in light of recent financial market events and increasing economic uncertainty. Consumer spending was relatively flat across most districts.
In terms of manufacturing, Midwestern and Western regions are continuing to see growth, whereas Mid-Atlantic areas have witnessed contractions in production. We have already seen much of this through the various manufacturing surveys released over the past few weeks, with the steep contraction in activity in Philadelphia presenting the most notable. The Boston and Dallas Federal Reserve Banks have seen business activity to Europe decline as a result of a weakened economy there, and many banks cited lower business and consumer confidence as having an impact.
Pricing pressures have eased somewhat, but “input costs continued to rise in select industries.” Some of the districts noted stabilization in raw material prices, with some manufacturers able to pass along price increases “with little resistance.” Yet, it remains a problem for many manufacturers. Wage pressures, however, have been minimal.
Chad Moutray is chief economist, National Association of Manufacturers.