**MNI 5 Things:Moderate Infl;Tax Cut Effects Mixed-Fed Survey>

--For Beige Book Released Wed, Ahead of March 20-21 FOMC Meeting 

By Jean Yung

     WASHINGTON (MNI) - The following are the key points from the 

Beige Book compiled by the Federal Reserve Bank of San Francisco through 

Feb. 26: 

     -Anecdotal evidence of a pick-up in inflation should give Fed 

officials confidence to push ahead with tightening this year. Business 

contacts reported prices increasing in all districts, with most areas 

noting "moderate inflation." Firms in four Fed districts saw a "marked 

increase" in steel prices, due in part to a decline in foreign 

competition. Price growth for building materials rose due to an uptick 

in construction activity while higher fuel costs drove moderate 

increases in transportation costs. 

     -Firms in a few districts reported handing out modest increases in 

compensation following Congress's tax overhaul but many said it was too 

soon to determine the effect of the new tax code on capital investment. 

One large retailer in the Boston Fed district planned to pass along half 

its tax savings to workers in the form of higher wages, while firms in 

the Minneapolis district reported a number of one-time bonuses. 

     -Labor markets remained tight, reflecting a low unemployment rate. 

Firms in most districts reported raising wages and expanding benefit 

packages in response to "persistent labor market tightness" and "brisk 

demand for qualified workers," the Beige Book said. 

     -Economic activity expanded at a modest to moderate pace across 

all 12 Fed districts in January and February. Consumer spending was 

mixed with auto sales flat or declining in every district. Loan volumes 

were generally flat. Manufacturers saw a broad-based increase in 

production. Energy and mining activity in the Minneapolis district was 

robust. 

     -A shortage of labor and materials continued to constrain the 

construction sector even as building activity expanded. Low inventories 

continued to plague the residential real estate market, dragging down 

sales, while conditions in commercial real estate improved moderately 

since the end of 2017. Commercial rents in and around New York City were 

up significantly, the Beige Book said. 

     ** MNI Washington Bureau: 202-371-2121 ** 

[TOPICS: MAUDS$,M$U$$$,MAUDR$,MT$$$$,MMUFE$]