By Paul Handley, AFP
WASHINGTON–The U.S. economy grew at a “moderate” pace across most regions at the end of 2013, the Federal Reserve’s “Beige Book” survey showed Thursday, with muted price and wage rises. The survey, covering the end of November and December, showed hiring in most areas was slow but steady, “with few instances of rapid growth but very few reports of staff cuts or plant closings.” That backed official data showing the economy continued to pick up pace in the fourth quarter but may have hit a slight lull in December. Labor Department data showed last week that a weak 74,000 jobs were generated in December, compared with expectations of nearly 200,000. The Fed characterized growth in nine of its 12 districts as “moderate,” three “modest” and one, Kansas City, “steady.” Retail sales were up in nine districts, and all 12 noted year-on-year increases in manufacturing activity, according to the Beige Book. Prices were stable in half of the districts and saw small increases in the rest. Two-thirds of the districts saw increases in hiring and wages, with the wage gains called “small to moderate.” “Most district reports indicated that wage and price pressures were contained and did not present major problems for local contacts,” the report said. In the regions that showed slower activity, particularly Kansas City, severe winter weather was one reason given, it said. Growth was fairly broad across sectors, including construction and services. The sharp fall in hiring in December as reported by the Labor Department was blamed by many analysts largely on a weather-caused slowdown in construction. But the Beige Book said most districts reported increases in homes sales and residential construction, and the same for commercial real estate sales and building. On the other hand, banking and financial activity was flat, with no district noting a substantial change in loan volume. In addition, it said, no district reported significant changes in credit standards. An easing of standards would be a signal for generally more economic activity. Three areas, Philadelphia, Chicago and San Francisco, however reported some instances of more relaxed underwriting standards by financial institutions. “Some contacts attributed this relaxation to increased competition in lending markets,” according to the report. The onset of the Obama administration’s health reforms, the Affordable Care Act, continued to generate waves through business.
Respondents pointed to widespread expectations or fears of a rise in the cost of providing health benefits to employees. “On balance, many firms expressed continued hesitancy caused by concerns about healthcare reform in terms of their overall hiring plans,” was a comment from the Atlanta district. Respondents were generally optimistic about this year, the report added. “The outlook for 2014 is positive, with most districts reporting that contacts expected activity in nonfinancial services sectors to continue to increase at a moderate to strong pace.”