Mike
01-20-2005, 02:30 AM
Fed reports improving economic picture
By JEANNINE AVERSA, AP Economics Writer, AP Online
January 19, 2005
WASHINGTON (AP) - Shoppers and tourists kept salespeople busy, factories for the most part hummed and the jobs picture brightened over the last few months, fresh signs that the economy is moving solidly ahead.
Those were some of the developments contained in the Federal Reserve's latest snapshot of economic activity, released Wednesday. The Fed's survey of business conditions around the country also suggested that inflation isn't currently a danger to the economy.
Eleven of the Fed's 12 regional districts characterized economic activity from late November through early January as expanding, the Fed survey said. The Cleveland district, however, reported that activity in its region was mixed.
The report is dubbed the Beige Book for the color of its cover, but the signals that it sent were anything but drab. These indicators of an improving economy will be discussed when Fed policy-makers meet for the first time this year, on Feb. 1-2.
Economic analysts are predicting that the Fed probably will boost a key short-term interest rate by one-quarter percentage point - to 2.50 percent - at that time.
The Fed report suggests that "the idea of measured tightening remains the order of the day," said Stuart Hoffman, chief economist at PNC Financial Services Group. "The Beige Book didn't signal more concern about inflation or about the economy. That's a perfect recipe for another quarter-point rate hike," he said.
Fed policy-makers raised rates five times in 2004- with each increase by a quarter-point. It was part of a campaign that started in June to move rates from what had been an extraordinarily low level to a more normal one now that the economy has recovered from the 2001 recession and terror attacks.
The Fed survey said that "consumer spending increased in most districts" since its last survey released in early December. Consumer spending is important because it accounts for roughly two-thirds of all economic activity in the United States.
"Sales of luxury goods were strong in the Kansas City, Philadelphia and San Francisco districts, while retailers in the Atlanta, Chicago and Kansas City districts reported that electronics and jewelry sold well during the holiday season," the report said.
Gift cards sold briskly in some markets, although sales of automobiles were mixed, the survey noted.
"Adding to the strength in household spending was an increase in tourism in several districts," the report said.
Hotel occupancy rates were up in the Fed districts of Boston as well as San Francisco, where the number of Japanese visitors to Hawaii has returned to pre-September 11, 2001, levels, the report said.
In the New York region, "tourist activity was higher both upstate and in New York City, where Broadway theaters set a box-office record during the last week of the year." In the Atlanta district, tourism also was strong. "Central Florida theme parks were filled to capacity," the survey noted.
On the manufacturing front, factory activity generally strengthened. "Looking ahead, manufacturers expected conditions to remain positive in coming months," the survey said. "Most districts reported that manufacturers intend to increase their capital spending in 2005."
If that happens, that could bode well for stronger hiring in the months ahead.
In late 2004, Fed districts "generally reported firmer labor markets," the survey said. Business contacts in Dallas, Kansas City, Minneapolis, New York and Richmond, Va., reported improvement on the job front, the survey said. But contacts in Boston, Chicago and San Francisco saw little change in hiring activity.
Last year, the economy generated a net 2.23 million jobs, the first annual increase in three years.
Meanwhile, addressing the nation's pricing climate, "inflationary pressures remained largely in check in December and early January," the Fed survey said.
Business contacts in Dallas noted that many firms were unable to pass rising costs along to customers because of stiff competition, the survey said.
From an economic point of view, inflation isn't currently a threat to the economy, analysts say. But rising inflation does hit consumers squarely in the wallet. Consumer prices for all of 2004 rose by 3.3 percent, the Labor Department reported Wednesday. That was up considerably from a 1.9 percent gain for all of 2003. Surging energy costs were the main culprit behind last year's rise.
By JEANNINE AVERSA, AP Economics Writer, AP Online
January 19, 2005
WASHINGTON (AP) - Shoppers and tourists kept salespeople busy, factories for the most part hummed and the jobs picture brightened over the last few months, fresh signs that the economy is moving solidly ahead.
Those were some of the developments contained in the Federal Reserve's latest snapshot of economic activity, released Wednesday. The Fed's survey of business conditions around the country also suggested that inflation isn't currently a danger to the economy.
Eleven of the Fed's 12 regional districts characterized economic activity from late November through early January as expanding, the Fed survey said. The Cleveland district, however, reported that activity in its region was mixed.
The report is dubbed the Beige Book for the color of its cover, but the signals that it sent were anything but drab. These indicators of an improving economy will be discussed when Fed policy-makers meet for the first time this year, on Feb. 1-2.
Economic analysts are predicting that the Fed probably will boost a key short-term interest rate by one-quarter percentage point - to 2.50 percent - at that time.
The Fed report suggests that "the idea of measured tightening remains the order of the day," said Stuart Hoffman, chief economist at PNC Financial Services Group. "The Beige Book didn't signal more concern about inflation or about the economy. That's a perfect recipe for another quarter-point rate hike," he said.
Fed policy-makers raised rates five times in 2004- with each increase by a quarter-point. It was part of a campaign that started in June to move rates from what had been an extraordinarily low level to a more normal one now that the economy has recovered from the 2001 recession and terror attacks.
The Fed survey said that "consumer spending increased in most districts" since its last survey released in early December. Consumer spending is important because it accounts for roughly two-thirds of all economic activity in the United States.
"Sales of luxury goods were strong in the Kansas City, Philadelphia and San Francisco districts, while retailers in the Atlanta, Chicago and Kansas City districts reported that electronics and jewelry sold well during the holiday season," the report said.
Gift cards sold briskly in some markets, although sales of automobiles were mixed, the survey noted.
"Adding to the strength in household spending was an increase in tourism in several districts," the report said.
Hotel occupancy rates were up in the Fed districts of Boston as well as San Francisco, where the number of Japanese visitors to Hawaii has returned to pre-September 11, 2001, levels, the report said.
In the New York region, "tourist activity was higher both upstate and in New York City, where Broadway theaters set a box-office record during the last week of the year." In the Atlanta district, tourism also was strong. "Central Florida theme parks were filled to capacity," the survey noted.
On the manufacturing front, factory activity generally strengthened. "Looking ahead, manufacturers expected conditions to remain positive in coming months," the survey said. "Most districts reported that manufacturers intend to increase their capital spending in 2005."
If that happens, that could bode well for stronger hiring in the months ahead.
In late 2004, Fed districts "generally reported firmer labor markets," the survey said. Business contacts in Dallas, Kansas City, Minneapolis, New York and Richmond, Va., reported improvement on the job front, the survey said. But contacts in Boston, Chicago and San Francisco saw little change in hiring activity.
Last year, the economy generated a net 2.23 million jobs, the first annual increase in three years.
Meanwhile, addressing the nation's pricing climate, "inflationary pressures remained largely in check in December and early January," the Fed survey said.
Business contacts in Dallas noted that many firms were unable to pass rising costs along to customers because of stiff competition, the survey said.
From an economic point of view, inflation isn't currently a threat to the economy, analysts say. But rising inflation does hit consumers squarely in the wallet. Consumer prices for all of 2004 rose by 3.3 percent, the Labor Department reported Wednesday. That was up considerably from a 1.9 percent gain for all of 2003. Surging energy costs were the main culprit behind last year's rise.