Fed Beige Book

The Federal Reserve building in Washington in 2015.

WASHINGTON • Most U.S. businesses remain optimistic about their prospects despite concerns about tariffs and trade policy, as the economy continues to grow, the Federal Reserve said Wednesday in its “beige book” report of anecdotes from business contacts. Here are highlights from the release:

• Economic activity and employment appeared to grow at a modest pace in August and late July. Wages rose at a “modest to moderate” pace from the earlier part of the summer, and price increases were also modest.

• “Although concerns regarding tariffs and trade policy uncertainty continued, the majority of businesses remained optimistic about the near-term outlook,” the Fed said in its summary of the report.

• While most sectors of the economy grew, agriculture remained weak and manufacturing activity “was down slightly from the previous period.”

That was consistent with a report this week from the Institute for Supply Management that pointed to a contraction in the factory sector in August.

• Housing remained stagnant in most districts, while new-home construction was flat.

• Consumer spending appeared mixed, with some districts reporting growth while others reported flat sales.

The Atlanta Fed noted that retailers in its district saw “heightened uncertainty among consumers due to the geopolitical environment; they also expressed concerns about whether this uncertainty will impact consumer confidence and spending behavior during the upcoming holiday season.”

• There were 62 mentions of tariffs, trade policy or related terms, up from 54 in the previous beige book, released July 17.

• Reports about the impact of tariffs remained mixed. The New York Fed’s contacts in retail and auto sales said the effects on prices haven’t been noticeable.

One of the Chicago Fed’s contacts predicted that new tariffs on Chinese imports wouldn’t start affecting retail prices until early 2020, while another reported that some retailers had already begun implementing “incremental” price increases.

• Some companies reported that tariff-related uncertainty was hampering their investment plans.

“Several contacts reported that both they and their customers had delayed capital spending as trade tensions and related uncertainty clouded their outlooks,” the Cleveland Fed said.

Conversely, one electrical-equipment firm in the Boston Fed’s district said tariffs had led them to invest more in automating factories in the U.S. rather than moving them to Mexico.

Contact Wayne Heilman 636-0234

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