**MNI POLICY: Beige Book:Trade Concerns In Mfg--All Districts>

--Five Things We Learned From the July 18 Beige Book

By Kevin Kastner, Sara Haire, Harrison Clarke, and Shikha Dave

     WASHINGTON (MNI) - The Federal Reserve's Beige Book noted that the 

economy expanded at a moderate to modest pace for almost all districts, 

but some input price gains reflected impact from tariffs. 

     Here are the key points from the Beige Book compiled by the Federal 

Reserve Bank of Boston through July 9, 2018: 

     - The economy continued to expand, with 10 districts reporting 

"moderate to modest" growth. Dallas and St. Louis were on opposite ends 

of the spectrum, with Dallas reporting "strong growth" while St. Louis 

described growth as slight. Dallas' strength was driven in part by the 

energy sector.  

     - There was heightened concern over trade policy and recent tariffs 

within the Beige Book. Manufacturers in all the districts voiced 

concerns over tariffs and many of the districts saw higher prices and 

supply disruptions which were attributed to the recent trade policies. 

Despite Federal Reserve officials saying small macroeconomic effects 

have yet to surface in the data, the Beige Book reported tariffs 

contributed to the increases in lumber and metal prices.  

     - All districts reported that prices have increased at a "modest to 

moderate pace" on average, but in several districts there were reports 

of upticks in inflation. Looking forward, some districts expect pricing 

pressures to "intensify," while others continue to expect stable price 

gains at a "modest to moderate pace." In addition to price increases for 

metals and lumbers, other prices for key inputs rose, including "fuel, 

construction materials, freight, and metals." However, the pass-through 

to consumer prices at this point have stayed "slight to moderate." 

     - The Beige Book again reported that all districts saw tight labor 

market, and many districts said that the inability to find workers 

"constrained growth." Six districts mentioned that trucking capacity was 

an issue and it was likely due to a shortage of commercial drivers. 

Firms have reported numerous ways of trying to attract and retain 

workers, including increasing compensation. However, wage increases 

still remain modest to moderate. A couple districts did note a pickup in 

the pace of wage growth. 

     - Consumer spending reportedly up in all districts, with 

"particular strength" seen in Dallas and Richmond. Contacts within 

several districts reported existing home sales growth had slowed, but 

still were not "overly concerned" about the impact of rising interest 

rates.  

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

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