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Beige Book: Economy expands at moderate to modest pace

Federal Reserve districts reported moderate to modest economic growth, according to the central bank's latest Beige Book report.

The report also noted wage pressures due to skilled labor shortages, including for truck drivers in New York, construction workers in Atlanta and energy workers in Dallas.

Consumer spending growth was slight to moderate in most districts, with auto sales leading the expansion. Two districts, Philadelphia and Dallas, reported sales falling back, though.

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Many districts also reported record high crop yields, with according declines in certain agricultural commodity prices.

"Reports from the twelve Federal Reserve Districts indicated that economic activity has expanded since the previous Beige Book report; however, none of the Districts pointed to a distinct shift in the overall pace of growth," the report said.

Taken as a whole, the details keep in step with the Fed narrative—that economic progress remains on a steady track that is nonetheless not strong enough to be maintained without extremely accommodative policy. That is coming in the shape of short-term interest rates kept near zero and a monthly bond-buying program expected to end in October.

The Fed has been watching for signs of employment growth—wages in particular—as well as signs that inflation is gaining. However, the Beige Book states that the trends in all three categories "were relatively unchanged" during the two-month reporting period. It noted only "greater wage pressures reported in sectors where shortages of skilled labor persisted."

Among individual districts, the Fed noted that San Francisco area consumers "appeared more optimistic about the recovery," though New Yorkers were "mixed" while the Cleveland and Richmond districts "indicated that consumers were being conservative in their discretionary spending."

The report cited strong back-to-school sales in various districts, while San Francisco, at the core of technology growth, reported strength in electronics. Along those lines, the report cited "robust demand for software products" in Boston

Tourism also showed gains, as "most reporting districts indicated optimism about future activity levels, with Boston, Richmond, and San Francisco reporting strong advance hotel bookings through the fall." Richmond noted "an early arrival of the peak import season."

Housing gains appeared fairly limited, though multi-family construction was reported high in Boston, New York and Dallas.

Banking activity also improved, with loan growth seen across all Fed districts.

This is breaking news. Check back for updates.

For the full report, go here.

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