Economy sees more moderate growth
September 6, 2017
• But impact of hurricanes yet to be measured completely
• In the West, economic activity continued to expand at a moderate pace
Economic activity expanded at a modest to moderate pace across all of the U.S. in July and August, the Federal Reserve says in a report released Wednesday, for which the data was primarily collected before Hurricane Harvey made landfall on the Gulf Coast.
Consumer spending increased in most Districts, with gains reported for non-auto retail sales and tourism, but mixed results for vehicle sales.
Capital spending also increased in several Districts. Manufacturing activity expanded modestly on balance.
That said, reports were mixed regarding auto production, and contacts in many Districts expressed concerns about a prolonged slowdown in the auto industry, says the Federal Reserve in its Beige Book report.
Both residential and commercial construction increased slightly overall. Low inventories of homes for sale continued to weigh on residential real estate activity across the country, while commercial real estate activity increased slightly.
Activity in the energy and natural resources sector was generally positive prior to shutdowns arising from Hurricane Harvey.
Agricultural conditions were mixed overall, with drought conditions reported in multiple Districts.
Business and consumer loan demand grew at a modest pace in most Districts, with a number of banks reporting rising competition from both other banks and non-bank lenders.
In the West, economic activity continued to expand at a moderate pace during the reporting period of July through mid-August.
Overall price inflation was flat, while upward wage pressures intensified and labor market conditions tightened further.
Sales of retail goods were unchanged, and growth in the consumer and business services sectors remained strong.
Manufacturing activity picked up at a moderate pace, and activity in the agriculture sector expanded modestly.
Contacts reported robust activity in residential real estate markets, and conditions in the commercial sector strengthened. Lending activity grew at a modest pace.
Activity in the agriculture sector in the West picked up at a modest pace. Harvest yields of grain were strong. Dealers reported that demand for used agricultural equipment picked up, while sales of new equipment were soft.
Overcapacity in the energy generation industry hindered profitability somewhat, and contacts expect capital investments over the next few years to slow from historically high levels.