Economist's Insights

Fed’s Beige Book Cites Economic Progress and Tighter Labor Market

Apr 19, 2017

The Fed’s Beige Book report, released yesterday, continued to reflect an economy growing at a “modest” to “moderate” pace.  The report, compiled in advance of FOMC meetings, also highlighted a continued theme of firmer wages.  While wage growth has remained muted in the official wage and income reports, the Beige Book once again noted “modest” wage gains and stated that they “had broadened.”  The report also cited more companies experiencing increased employee turnover, an indicator that should be consistent with faster wage growth and, thus, firmer inflation.  Looking at the JOLTs data, it is easy to see “job quits” as a percentage of “job hires” has risen to a historically high level.  Yet, wage growth remains tempered at this time.  As it relates to monetary policy, the anecdotal data showing a still-growing economy and firmer labor market likely portend another rate hike as early as June.