Fed ballot reveals modest good points in US financial system in February | Oklahoma Information
WASHINGTON (AP) – A Federal Reserve survey of business conditions in the US found economic activity expanded at a modest pace in February.
The Fed poll released on Wednesday shows that the central bank’s business contacts last month expressed optimism about a stronger recovery as more COVID-19 vaccines are distributed.
Consumer spending and auto sales reports were mixed, while manufacturing grew modest overall, despite supply-side constraints, according to a Fed poll.
The report, known as the beige book, is based on surveys conducted by the Fed’s 12 regional banks. It will form the basis for discussion when central bank officials meet on March 16-17 to reflect on their future monetary policy.
The expectation is that the Fed will keep its short-term policy rate at a record low of zero to 0.25%. The central bank is also expected to signal again that interest rates will not rise for the foreseeable future, and the current pace of $ 120 billion per month for bond purchases is also set to continue.
Most of the Fed’s 12 regions said the economy grew at a modest pace in February, although the Dallas area said activity was disrupted by a severe winter storm that temporarily turned off electricity for millions of residents.
“Unprecedented winter storms and widespread power outages in mid-February have severely disrupted economic activity, although the effects are likely to be temporary,” the Fed’s regional bank in Dallas reported.
The New York Fed was one of the few regions to see a decline in activity over the past month, indicating “particular weakness” in the services sector.
The beige book survey found that labor demand fluctuated significantly depending on the industry and skill level. Many companies have experienced persistent difficulties in attracting and retaining a skilled workforce as the pandemic still does not bring childcare and a host of other restrictions.
“Wage increases for many districts are expected to continue or increase somewhat over the next few months,” the report said.
Total manufacturing activity in most districts increased slightly despite challenges from supply chain disruptions.
Input costs have increased slightly over the past month, but with higher price increases for steel and lumber, the report said.
“In many districts, the increase in costs was largely due to supply chain disruptions and strong aggregate demand,” the beige book said, noting that transportation costs had increased due to increased energy costs.
Gus Faucher, chief economist at PNC Financial Services Group, said the beige book results were in line with his own economic forecast, which expects GDP growth to be moderate for the current quarter but acceleration for the rest of the year.
“Companies expect demand to rise in the spring and beyond as vaccine distribution continues. Better weather enables more outdoor activities and stimulus efforts support consumer spending,” Faucher said.
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