MNI POLICY: US Economy Slowed in November - Fed Beige Book

By Jean Yung

     WASHINGTON (MNI) - Growing uncertainty over trade policy, rising interest

rates and labor shortages weighed on the U.S. economy in November as growth

slowed in parts of the country, the latest Federal Reserve report on Current

Economic Conditions said Wednesday. 

     The following are the top takeaways from the Fed's latest Beige Book, an

anecdotal report of economic activity officials use in preparing for the

upcoming Federal Open Market Committee meeting. It was prepared by the

Philadelphia Fed with information collected before Nov. 26. 

     --Most of the 12 Fed districts expanded at a modest or moderate pace from

mid-October through late November. The districts of Dallas and Philadelphia

noted slower growth while St. Louis and Kansas City noted just slight growth.

Consumer spending held steady but new home construction and existing home sales

tended to decline or hold steady, while construction and leasing of

nonresidential structures tended to rise or remain flat. 

     --Tariffs remained a concern for manufacturers, but a majority of districts

continued to report moderate growth in the sector. Overall, firms cited

"increased uncertainty from impacts of tariffs, rising interest rates, and labor

market constraints" as reasons why their optimism had waned slightly through

November. A number of firms noted that rising interest rates was eroding the

affordability of housing even as home prices continued to climb. 

     --Inflation remained modest in most areas with just a few Fed districts

noting moderate price increases. Nearly all reported that input costs rose

faster than final goods prices. Tariff-induced cost increases spread more

broadly from manufacturers and contractors to retailers and restaurants, the Fed

reported. 

     --The labor market tightened further as more than half of the Fed districts

said worker shortages constrained their businesses. Most districts reported that

wage growth "tended to the higher side of a modest to moderate pace." 

--MNI Washington Bureau; +1 202-371-2121; email: jean.yung@marketnews.com

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