Newsroom

January 18, 2017

Fed Beige Book shows continued economic growth

The economy continues to expand at a moderate pace, according to the Federal Reserve's Beige Book released Wednesday. NAFCU Chief Economist and Director of Research Curt Long said that as the economy continues to grow, wages should also increase.

"Wage growth will be a key trend for 2017," Long said. "Stronger wage growth due to a tightening labor market would be a boost to consumer spending, but it could also spur inflation. The Fed has consistently communicated its intentions to normalize rates gradually, but if inflation picks up there may be no alternative to a faster pace of rate hikes."

The January issue of the Beige Book is based on information collected from late November through the end of the year.

All 12 Federal Reserve districts reported varying degrees of growth in employment and a majority described their labor markets as tight. Many of the districts expect labor markets to continue to tighten throughout this year, with wage pressures likely to rise and the pace of hiring to hold steady or increase.

Most of the districts reported that non-auto retail sales had expanded, but several noted that sales over the holiday season were disappointing. Firms across the country and various industries were reported as being optimistic about growth in 2017.

A NAFCU Macro Data Flash report yesterday noted that the consumer price index rose 0.3 percent in December and increased 2.1 percent year-over-year – the highest rate since mid-2014.