Market CommentariesThe Beige Book

The Federal Reserve's Beige Book review of the nation's economy was issued earlier this afternoon and it was received with a yawn. Specifically, the stock market, off modestly before the release, with the Dow Jones Industrial Average down some 40 points, or so, barely moved in the first minutes following the publication.

As to the Beige Book, it is a Federal Reserve publication about current economic conditions across the 12 Federal Reserve Districts. It details regional business status and prospects based on a variety of mostly qualitative information. The summation is then used by the central bank to formulate monetary policy at upcoming FOMC meetings.

Regarding the latest Beige Book's findings, the report signaled that most of the 12 Federal Reserve Districts were currently seeing their economies continue to expand at a modest or moderate pace from early April to late May. Boston and Chicago, however, observed that their Districts had slowed somewhat to a modest pace since the prior Beige Book period.

As to a sector or market breakdown, the report affirmed that the nation's labor market was tightening to a degree, with most of the Districts citing shortages across a broadening range of occupations and regions. At the same time, pricing pressures were little changed since the last Beige Book report.

Moreover, retailers noted that spending had softened with many Districts noting little, or no change in non-auto sales, while auto sales have edged down from last year's record highs. Manufacturing was reported as improving moderately across many Districts. Nonfinancial services also were gaining, for the most part.

Real estate activity, meantime, was generally firming as well, with construction of new homes and residential structures continuing to grow at modest to moderate rates. Sales of existing homes were mostly strengthening, too, although there has been spottiness shown in some recent national surveys.

Overall, then, this was a reassuring report that should not change the Federal Reserve's apparent determination to increase interest rates at its mid-June FOMC meeting. We also would look for another rate hike later on in the year and as many as three more rate adjustments in 2018.