The Federal Reserve’s “Beige Book,” released Sept. 4 reports continued economic expansion throughout most of the U.S. from early July through late August on the strength of increased consumer spending, particularly on automobiles and housing-related goods. The central bank said manufacturing activity was up somewhat in the period, while real estate activity increased in most districts.
“Lending activity was mixed,” the report says. “Lending standards were largely unchanged, while credit quality improved.”
Retailers in the Northeast reported “robust demand gains” with year-over-year same store sales increasing 4% to 5%. “Many Districts noted strong demand for home furnishing and home improvement items,” the report says, although the fed warns that “consumers remained cautious in their purchases and highly price-sensitive.”
Manufacturing activity also saw modest, but uneven, increases during the period, with Atlanta, Chicago, Kansas City, Philadelphia, Richmond, and San Francisco experiencing increased demand for autos, housing, and infrastructure.
“In the Richmond District, a lumber company purchased new equipment to expand its production; and in Chicago, demand for construction equipment and materials continued to strengthen,” the report says. “Philadelphia reported some increased demand related to ongoing repairs of infrastructure damaged during Superstorm Sandy last year.”
The fed found that the pace of sales of existing single-family homes increased moderately, while in New York City, the co-op and condominium market was unusually strong. Year-to-date sales of existing single-family homes rose substantially in the Cleveland district.
“Rising home prices and mortgage interest rates may have spurred a pickup in recent market activity, as many ‘fence sitters’ were prompted to commit to purchases,” the fed says, noting that new home sales declined a bit in portions of the Philadelphia and Richmond areas.
Single-family home construction was held back in several areas by shortages of construction workers (San Francisco) and shortages of building materials, such as drywall and roofing shingles (Kansas City).