Beige Book Reports Economic Activity Marginally Increased Despite Widespread Inflation

• The Federal Reserve (Fed) February Beige Book1 noted that half of the 12 Federal Reserve districts saw little or no change in economic activity, while the other six witnessed economic activity expand at a modest pace. Consumer spending generally held steady, though some districts witnessed modest-to-strong growth in retail sales during what is typically a slow period for the retail sector. Automobile sales were reported to be little changed as inventory levels show continued improvement.
• Bottom Line: The economy continues to hold up well amid the Fed’s hawkish policy. Inflation continues to be an issue and will likely stay elevated in the near term as consumers release pent-up demand for services in addition to travel. Rental prices, which are an important component of inflation, should decline as additional multi-family units come online in the coming months. 

¹ Commonly known as the Beige Book, this report is published eight times per year. Each Federal Reserve Bank gathers anecdotal information on current economic conditions in its District through reports from Bank and Branch directors and interviews with key business contacts, economists, market experts, and other source.