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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (37654)	1/19/2000 3:44:00 PM
From: Les H	Read Replies (3) \| Respond to of 99985

FED BEIGE BOOK: STRONG GROWTH, LOW INFLATION, BUT SOME EXCEPTIONS 14:24 EST 01/19 By Steven K. Beckner Market News International - The economy continues to enjoy "strong growth" with relatively little inflation, but there are some indications of increasing wage and price pressures, according to the Federal Reserve's latest beige book survey -- released Wednesday -- of economic conditions around the nation. The beige book, prepared by the Federal Reserve Bank of Cleveland for review at the Feb. 1-2 meeting of the Federal Open Market Committee, found strong retail spending and manufacturing activity among the 12 Federal Reserve districts which collected anecdotal information from contacts prior to Jan. 12. "Reports from most Federal Reserve districts indicated strong economic growth in December and early January," the beige book summary said, pointing to "rapid" consumer spending during the holidays and expectations that it would stay at a "high level" in early 2000. "Manufacturing continued to expand in nearly every district and was broadly based across industries," with the exception of food, apparel, agricultural equipment and some construction-based industries. The only exception to the generally strong tone of the economy was residential construction, which the beige book described as "mixed." In the face of such strength, "labor markets remained tight in all districts," the survey found. "However, the tight labor markets did not seem to be matched with large wage increases." "Most consumer prices appear to be holding steady in much of the country, although a few districts reported moderate increases," the beige book continued. "Producer prices also appear to be flat, with the exception of rising petroleum prices." There were notable exceptions to the low inflation climate, however. On the wage front, the Richmond Fed reported "moderately strong increases in the retail and service industries." There were also reports of wage increases from the Dallas and Minneapolis Feds, with the latter reporting plans for wage hikes "of at least 4%." What's more, "many districts indicated that wage pressure is being met by non-wage benefits such as stock options, bonuses and increased health benefit coverage." On the price front, while "most districts reported steady consumer prices," the beige book said "there were some exceptions, however." Notably, the Minneapolis Fed "noted signs of accelerating inflation, including reports that many consumers expect the consumer price index to rise by more than 3% and that a rising percentage of firms plan price increases." The Philadelphia Fed also reported planned price increases, and the Richmond Fed reported "moderate price increases in both the retail and service sectors." The Boston Fed noted rising hotel prices, and the New York Fed reported "sharp increases" in real estate prices. Detailing worker scarcities, the beige book cited shortages of office managers, high-tech workers, nurses, truckers and pharmaceutical workers in various districts. On the other hand, "increasing numbers of construction workers are looking for work due to soft demand" in some places. In the key consumer spending sector, the Fed said "retail sales attained or exceeded expectations for the month of December in all districts except the St. Louis district." The beige book said "sales were especially high throughout the nation in electronics, toys and jewelry." "All regions reported large gains in e-commerce," the beige book said. Bank lending was "mixed," with less mortgage lending offset by increased consumer and commercial lending, the beige book said.