Economist's Insights

Beige Book Describes Stable Growth, Trade Concerns, Tight Labor Market, Modest Wage Growth, Moderate Inflation Pressures

Apr 19, 2018

The Fed’s Beige Book again described the pace of economic expansion as “modest to moderate” (March and early April) across the 12 Districts. However, business contacts caveated their positive outlook with some consternation towards the “newly imposed and/or proposed tariffs.” The word tariff appeared 36 times throughout the April edition, up from 0 mentions in March. On the Fed’s mandate, “widespread employment growth continued,” but “difficulty finding qualified candidates across a broad array of industries and skill levels” was capping gains. However, “businesses were responding to labor shortages in a variety of ways, from raising pay to enhancing training to increasing their use of overtime and/or automation,” which may help explain why ”upward wage pressures persisted but generally did not escalate; most Districts reported wage growth as only modest.” The Fed did note that “prices increased across all Districts, generally at a moderate pace” and the subsequent discussion was firmer in tone towards the general characterization of inflation pressures.