The Beige Book may well be renamed the Boring Book due to the uniformity of its monthly pronouncements, and this month was no different. Here is the bottom line: "Reports from the twelve Federal Reserve Districts suggest economic activity continued to expand across most regions and sectors from late November through the end of the year. Nine Districts indicated the local economy was expanding at a moderate pace; among these, the Atlanta and Chicago Districts saw conditions improve compared with the previous reporting period. Boston and Philadelphia cited modest growth, while Kansas City reported the economy held steady in December. The economic outlook is positive in most Districts, with some reports citing expectations of “more of the same” and some expecting a pickup in growth." Still, a few things stands out in a report that saw moderate expansion in the economy across most of the US:
- the Fed said most districts reported increases in home sales... except we assume for San Francisco where home sales plunged to 6 year low,
- the Fed sees "very few reports of staff cuts of plant closings"... which we guess ignores the December jobs reports where the least jobs were added since January 2011,
- the Fed said nine districts reported an increase in retail spending... which is curious considering retail traffic plunged and the holiday spending season was the worst since 2009,
- the Fed said almost half of district reported prices were stable... which probably means the Fed's inflation benchmark is now well below 2%
- and Finally, the Fed said eight district reported upward movement in wages... which also is confusing considering real disposable income per capita just dropped into the negative.
Oh well: we suppose we will take the Fed's word for it.
- More interesting were the Fed's prop mentions of cold weather and Obamacare. Here they are:
- Richmond noted a general slowdown in retail spending in recent weeks and the Kansas City District cited lower than expected holiday sales, which retailers there attributed to a shorter selling season and harsh weather conditions.
- Apparel sales were reportedly strong in Boston and Richmond, while Philadelphia, Cleveland, and Chicago indicated that cold-weather gear and winter items were selling well.
- Contacts report that sales were hampered by harsh weather in late November into early December across much of New York State
- In some regions of the [Cleveland] District, retailers experienced a tapering off as December progressed. They attributed the decline in part to persistently poor weather conditions.
- A few sod and seed companies [in the Richmond district] reported a decline as a result of poor weather conditions.
- Delays in holiday shipments to consumers were reportedly due to the shortened shopping season, higher than expected on-line sales, adverse weather conditions
- [In Chicago] severe winter weather, while reducing store traffic in some locations, spurred sales of winter-related items
- [In Kansas City] district retailers had expected higher levels and attributed the lower than expected sales to a shorter and slower holiday shopping season, and harsh weather conditions.
- Some contacts cited poor weather, and continued fiscal and regulatory uncertainty as reasons for the December slowdown.
- [In Dallas] construction-related manufacturers reported slow demand in early December due to poor weather, but business bounced back soon after.
And yet there was an increase in retail spending? Good to know.
As for Obamacare:
- In regard to hiring and capital expenditure plans, firms continued to expand cautiously and will do so until the pace of growth strengthens and exhibits sustainability; in addition, they face ongoing uncertainty from implementation of the Affordable Care Act.
- Hiring in the District continued to improve, despite lingering concerns about costs related to the Affordable Care Act and difficulty finding highly skilled workers
- Demand was generally soft at hospitals and other healthcare organizations, and administrators reported that they expect decreasing utilization along with declining Medicaid and Medicare reimbursement under the Affordable Care Act.
- Employers continued to express concern about potential cost increases related to the Affordable Care Act.
- Outlooks were positive for the first part of 2014, but some contacts remained concerned about the impact of the Affordable Care Act on business.
In other words, no change.
Full Beige Book can be found here