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Reports from the 12 Federal Reserve Districts suggest that the U.S. economy ended the just-concluded year on a modest to moderate upswing. Seven of the 12 Districts said that the expansion was proceeding at a modest pace. As to the other handful of Districts, New York and Chicago noted seeing an acceleration in growth. Also, Dallas and San Francisco indicated seeing a moderate level of business activity. Finally, Richmond saw a stable level of growth. Importantly, none of the dozen Districts noted any contraction in business activity, in the aggregate.

Meanwhile, by individual market, consumer spending was picking up in most Districts. That is critical, as this metric accounts for some two-thirds of the overall level of business activity. This general improvement reflected significant gains in holiday retail sales. Indeed, most Districts reported that holiday sales were up noticeably over last year, with New York and Dallas describing sales as “brisk” and “robust,” respectively. Only Kansas City, among the Districts chronicled, reported seeing a softening in sales in the period.
 
Demand also was up in the nonfinancial services, including professional and transportation services. Providers of professional and business services, including consulting, advertising, engineering, and legal services, expanded their level of activity according to Boston, Richmond, St. Louis, and Minneapolis. Healthcare services also were experiencing better demand. The lone exception here was San Francisco.
 
Manufacturing activity also generally continued to expand, although pockets of slowing growth likewise were noted. Exceptions to the overall improvement in this category were Cleveland, Richmond, and Dallas, which noted flattish activity, and Kansas City, where there was a slight retracement in growth. Activity stayed sluggish in residential real estate, meantime, as did activity in the commercial real estate sector.
 
On balance, the report was decent, but provided no major surprises one way or the other. Our assessment of the current state of the economy is that GDP growth in the recently concluded fourth quarter came in at 3%, or so, and that growth will ease back into the 2.0%-2.5% range in the present three months.


At the time of this article's posting, the author did not hold positions in any of the companies mentioned.