**MNI POLICY: Fed Beige Book: Growth Flatlined in 2 Districts>

--Key Things We Learned From The January 16 Beige Book

By Jean Yung and Kevin Kastner

     WASHINGTON (MNI) - U.S. economic activity continued to slow through 

the end of 2018 and into the new year as labor markets remained tight 

and tariffs and higher input costs weighed on businesses, according to 

the Federal Reserve's latest report on Current Economic Conditions. 

     Here are some key points from the report known as the Beige Book, 

as compiled by the Chicago Fed based on information gathered through 

Jan. 7: 

     - Eight of 12 Fed districts reported modest to moderate growth, 

down from 10 in the last Beige Book. Among the areas that saw a slowdown 

in activity, New York and Kansas City reported flat growth while St. 

Louis and Cleveland saw slight growth. Firms remained optimistic but 

less so than previously, on account of market volatility, rising 

interest rates, falling energy prices and elevated trade and political 

uncertainty. Manufacturing growth slowed, particularly in auto and 

energy, and lower energy prices caused firms in the sector to pull back 

future capital spending plans. 

     - Nonauto retail sales grew modestly on an uptick in holiday 

traffic, while auto sales were flat. Due to the partial government 

shutdown, the Commerce Department has yet to release retail sales data 

for December. 

     - Most firms noted higher input costs due in part to tariffs, but 

reports were mixed on whether businesses could pass the higher costs on 

to customers. Overall inflation remained modest to moderate. 

     - Labor markets stayed tight and pressured wages moderately higher 

throughout the country. Continued labor shortages limited business 

expansion in some areas and prompted employers to focus on retention 

efforts, going as far as to overstaff in anticipation of future growth. 

     - New home construction and existing home sales were little 

changed, capped by rising prices and limited inventory. Official data 

out of the Commerce Department on these indicators are also delayed due 

to the government shutdown. 

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

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