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Beige Book shows rosier outlook

By Allison Ross · Bankrate.com
Thursday, January 16, 2014
Posted: 4 pm ET

The U.S. economy continued to grow at a moderate pace through the end of 2013, the Beige Book reported on Wednesday.

In its report, the Federal Reserve said that nine of its 12 districts said that the local economy was expanding at a moderate pace and two-thirds of the districts reported increases in hiring.

"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," the report said.

The Fed releases the Beige Book eight times a year. The report compiles economic anecdotes from the 12 regional Federal Reserve banks to get an idea of how the country is doing economically.

Economic outlook more rosy

The economic outlook roundup prepared in the latest Beige Book was slightly rosier than the report's name may imply.

The Fed found a general improvement in real estate, although a few districts reported a slowdown in home sales or residential construction in some areas.

Reports on the agriculture sector were mostly positive, and all the districts reported year-over-year increases in manufacturing activity. Kansas City, Mo., reported slower manufacturing growth in December, although activity was still up from a year ago, the report noted.

Snapshots from around the country

The report offers small snapshot glimpses into the lives and outlooks of American consumers and business people -- many of whom have been wearily waiting for the economy to bounce back after the Great Recession.

For instance, automobile dealers in New York, Philadelphia and Kansas City saw sales declines in December, while auto sales in Richmond, Va., Atlanta and San Francisco remained strong. In Cleveland, consumers seemed to be shifting from smaller, more fuel-efficient cars to sport utility vehicles, crossovers and light trucks.

At one point, the report noted that "a manufacturer in the Dallas district said that for the first time since before the recession, his firm had too many jobs to bid on."

At another point, the Beige Book reported that anecdotes from the banking sector revealed "concern about new banking regulations and their potential negative impact on lending and operating costs."

Tourism was down in Hawaii and "somewhat weak" in Las Vegas, the report found, while "Minneapolis reported that winter tourism activity was off to a solid start on account of snowy weather."

And speaking of bad weather, the Kansas City district reported lower than expected holiday sales, "which retailers there attributed to a shorter selling season and harsh weather conditions." However, three-quarters of the districts said retail activity had increased since the last Beige Book.

Looking ahead

The Beige Book offers clues as to where the economy is and which direction businesses, market experts and others think it may be going.

The Federal Open Market Committee meets later this month, and it will use the Beige Book and other reports to help inform its decisions on monetary policy.

How's the economy in your city? Was the Beige Book accurate on activity where you live?

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