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The U.S. economy continued to expand in late January and February, but at an evidently slower pace, as global growth concerns and the longest government shutdown in U.S. history weighed on activity, a survey released on Wednesday by the Federal Reserve showed.

The Fed’s Beige Book, which contains anecdotal information from business contacts throughout the Federal Reserve’s 12 districts, showed that 10 Fed regions saw “slight-to-moderate growth.” The St. Louis and Philadelphia Fed banks reported “flat economic conditions.”

Half of the Fed’s districts saw the government shutdown dampen economic activity in a broad range of sectors, including retail, auto sales, tourism, real estate and restaurants. Factories expressed concerns about weakening global demand and trade uncertainties.

Fifty-four variations of the word “slow” were found in the report, compared with 78 references for “moderate” and 37 references of the word “strong,” according to Mark Hamrick, Bankrate’s senior economic analyst. This reinforces expectations that policymakers will not be raising rates at their next gathering in two weeks, he adds.

“Bad weather and government shutdown impacts are largely behind, but slowing global and U.S. growth and still-to-be-resolved outcomes of Brexit and U.S.-China trade talks mean the Fed will be waiting to see how the economy performs,” Hamrick says.

The Fed voted unanimously to keep borrowing costs unchanged at their January meeting, as they judge the impact of these uncertainties.

What the Beige Book shows about the U.S. economy 

Consumer spending was mixed throughout the country, the Beige Book showed. Winter weather and higher credit costs weakened sales during the first two months of 2019.

Meanwhile, the report showed that the job market is still worth bragging about. Employment increased in most districts, while the labor market remained tight for all skill levels.

Employers in the information technology, manufacturing, trucking, restaurants and construction sectors reported worker shortages.

Contacts told the Philadelphia Fed that firms are combating this worker shortage by “raising wages, increasing job flexibility, training new hires who have fewer skills than desired, and making greater use of trial periods of temp agency placements.”

Wages continued to increase for both low- and high-skilled positions across the nation, but the report denoted what growth for middle-tier earners looked like.

Fed officials will see Friday whether this anecdotal evidence rings true in the data, when the Department of Labor releases its monthly data on the employment situation. A separate employment report released Wednesday showed that private payrolls increased by 183,000 in February after an upwardly-revised 300,000 in January, which may mean that the labor market is nearing its peak, according to ADP.

Regional economic highlights from the Beige Book

But the self-proclaimed data-dependent Fed still has use for anecdotal information, especially after the lengthy government shutdown delayed key figures that the central bank relies on.

“It’s incredibly valuable,” Powell said of the Beige Book during the January post-meeting press conference. “You’re getting actual reports from people who are on the line.”

Here’s a roundup of the most interesting anecdotes across the Fed’s districts.

  • Boston: “Consumers seem willing to spend on all categories of goods, whether a $10 T-shirt or a $2,000 television set.”
  • New York: “Hotel occupancy rates, though still fairly elevated, slipped below year-ago levels” in New York City.
  • Philadelphia: “One contact noted an unexpected downtick in activity in the Poconos — partially due to poor weather in January.”
  • Cleveland: “Freight contacts reported demand was flat because of extreme weather in the Midwest and Northeast.”
  • Richmond: “Food manufacturers in Maryland and Virginia reported robust growth despite a drop in sales to D.C. area restaurants during the partial government shutdown.”
  • Atlanta: “New discoveries in the Gulf of Mexico contributed to increased activity in offshore exploration and production,” sources from the energy industry noted.
  • Chicago: “Loan quality was little changed, though one contact noted increased delinquencies among retailers.”
  • St. Louis: “One respondent noted that labor shortages are slowing down project construction schedules.”
  • Minneapolis: “Oil and gas drilling in North Dakota and Montana as of mid-February increased from a month earlier.”
  • Kansas City: “SUVs and trucks sold well, while sedans sold poorly.”
  • Dallas: “The expectation was for rent growth to remain solid in Austin and Forth Worth and to firm up in Houston.”
  • San Francisco: “A contact in the Pacific Northwest observed that activity at sawmills ticked down, due in part to poor weather affecting raw material deliveries and slower growth in the national housing market.”

What the Beige Book means for you

The Beige Book provides policymakers at the Fed with further reason to be patient with interest rate hikes, according to Bankrate’s Hamrick. That’s good news for borrowers, hit with four rate hikes in 2018.

Investors are still betting that the Fed will hold off on rate hikes all year, according to CME’s FedWatch tool.

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