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Summer Spending Surge Drives Modest Growth in the U.S., Reveals Fed’s Beige Book

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The Outlook

The U.S. economy grew at a modest pace in July and August, bolstered by “the last stage of pent-up demand” for leisure activities, according to the Federal Reserve’s latest survey of economic conditions that is known as the “Beige Book.”

What Happened

Outside of leisure travel, nonessential retail sales slowed, the survey said.

Auto Sales

  • Auto sales rose due to better inventory and not because of consumer demand, the survey said.

Job Growth

  • Job growth was subdued across the country.
  • Wage growth remained elevated but contacts in nearly all districts expect these gains to moderate in coming months.


  • Prices in consumer goods sectors fell faster than in many other sectors, the survey said.
  • Yet businesses are still facing high costs for inputs, putting pressure on profit margins.
  • There have been sharp gains in property insurance costs in recent months.

Big Picture

The Fed’s survey, conducted this time by the Kansas City Fed, is released eight times a year, always before Fed interest-rate meetings. It is designed to give policymakers a sense of conditions “on the ground” across the country.

Recent data indicate the economy is looking stronger in the current quarter. Economists at BMO Capital Markets have raised their forecast for Q3 GDP to 2.9% annualized from 2.5% previously.

Comments in the Beige Book suggest that this acceleration may falter in the autumn.

Market Reaction

U.S. stocks DJIA SPX were lower on Wednesday and the 10-year Treasury yield BX:TMUBMUSD10Y rose to 4.30% as Wall Street worried the economic resilience would lead to more Fed rate hikes.

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