What happens next Where's my refund? Best CD rates this month Shop and save 🤑
MONEY
Federal Reserve System

Fed Beige Book: Better economy, some rough spots

John Waggoner
USA TODAY

Neither rain nor snow dampened the U.S. economy from early January through mid-February, according to the Federal Reserve's Beige Book, an anecdotal survey of business conditions.

The economy continued to expand in most of the Fed's 12 districts, with Richmond being the sole exception. Despite near-record amounts of snow, the Fed's Boston district said business contacts were fairly upbeat.

The Fed is charged with keeping the economy humming and fighting inflation, and the Beige Book gave little indication that inflation was on the rise. Wage pressures were moderate in most districts, and limited to skilled workers. Most District contacts cited only flat to slightly increasing prices, the Fed says.

Bright spots:

Workers use cranes to clear snow from the roof of a shopping center in Braintree, near Boston, Massachusetts, 19 February 2015. A polar air mass is moving across the United States, prompting warnings on 19 February from the National Weather Service of a 'dangerous' and historic chill.

Most districts said that consumer spending, the main engine of the economy, increased from the previous Beige Book. Most districts said that retailers were optimistic. In snowbound Boston and Cleveland, retailers reported increased sales of winter clothes, rock salt and snow shovels. Auto sales rose in most districts as well.

Manufacturing activity increased in most districts as well, although the increases were spotty. Automobile manufacturing output rose in the Cleveland, Chicago, and St. Louis districts, and San Francisco aerospace manufacturers expect 2015 to be a record year.

Transportation demand generally improved, the Fed says, and contacts in Atlanta and Philadelphia reported record shipping volume. Atlanta contacts said labor slowdowns on the West Coast may account for its improvement in business.

Dark spots:

The plunge in oil prices is taking its toll in the oil patch. Demand for oil services and equipment fell sharply in Dallas, and demand for drilling services in the Minneapolis district fell as well. The Fed says the number of drilling rigs for oil and natural gas declined sharply in the Cleveland, Minneapolis, and Kansas City Districts, and many oil and gas producers say they will cut back on capital expenditures this year.

Bad weather slowed construction activity in New York, Philadelphia, and Cleveland, and home sales fell in Cleveland and Kansas City. Low levels of inventory and lack of desirable lots continued to slow the market. Nevertheless, commercial real estate improved in most districts, and most residential markets reported increased sales and prices.

And things are not good down on the farm. "Agricultural conditions worsened since the previous report across the Districts due to weak farm income, persistent drought, and declining exports," the Fed says. "Prices for corn and soybeans fell over the reporting period in the Chicago, Kansas City, and Dallas Districts. A majority of contacts in the Minneapolis and Kansas City Districts noted that farm incomes had fallen from year-earlier levels."

Featured Weekly Ad