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Reports from the 12 Federal Reserve Districts suggest that the U.S. economy continued to expand at a modest to moderate pace during the reporting of early July through late August. This compilation of business activity is known as the Beige Book, and is used by the Fed to help it formulate monetary policy at the next Federal Open Market Committee (FOMC) meeting. The next such meeting is planned for September 17th and 18th.

On balance, eight of the 12 Districts saw activity as proceeding at a moderate pace, while the remaining four, comprising Boston, Atlanta, and San Francisco reported modest growth, and Chicago indicated such activity had improved since the last Beige Book publication.

Breaking the report down, we find that consumer spending rose in most Districts, propelled forward by further gains in demand for autos and housing. Activity in the travel and tourism sector also strengthened in most locales. Better results also were seen in manufacturing, residential construction, nonresidential real estate, and agricultural products. Lending activity, though, was mixed, while lending standards were little changed from the last Beige Book.   

Meanwhile, for most occupations and industries, hiring held steady or increased modestly in the latest period. Inflation, in general, and wages in particular, continued to be modest, overall. This, too, was consistent with prior Beige Book summations.

On the whole, the report had few surprises, and the industry-by-industry picture was also consistent with the data seen in most individual reports. Of note, yesterday we saw a slight month-to-month improvement in manufacturing growth, while weekly jobless claims, retail spending, and incomes were improving, but in less-than-uniform increments.

Thus, there were few surprises in this report, and it would seem that whatever monetary plans the Fed had in mind going into this report, there should not be much change, as a result. Our sense, therefore, continues to be that the central bank will opt to slow the pace of bond buying gradually before yearend.

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