The Fed’s Beige Book: We Read It So You Don’t Have To – Real Time Economics

Idled trucks wait for an oil well to re-open in Texas. A Fed report said oil and gas producers and oilfield service firms have continued to cut their workforce as low oil prices forced deeper cost cutting.
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The U.S. economy expanded across most regions of the country in February through the end of March, with cheaper gasoline boosting retail sales in some districts and travel and tourism rebounding in other areas. Still, a strong dollar, falling oil prices and harsh winter weather slowed activity in some sectors, according to the Federal Reserve’s Beige Book report, a survey of regional economic conditions.

Here are some of the anecdotes offered from the Fed’s 12 regional banks:

• In the Boston region, one business is raising its minimum hourly pay “to remain competitive in the labor market in the wake of Wal-Mart’s well-publicized increase in minimum wages and to stay ahead of state and local regulations mandating higher minimum wages.”

• Extremely cold and snowy winter weather in the Boston area had ripple effects for food suppliers, delivery workers, and wait staff. One business “estimates that restaurant revenues in the Boston area were down 30% to 40% during this period, reflecting lost traffic from corporate travelers, regional leisure travelers, and weekend business from local residents.”

• “After a one-month anomalous increase in January, revenue results for Atlantic City casinos resumed the old patter of double-digit declines in February.”

• Operators of malls, outlet malls, and convenience stores in the Philadelphia region “agreed that lower energy prices were also boosting sales.” One business said “consumers had more discretionary income from energy savings at home and at the pump.”

• A Maryland executive and two large companies in North Carolina “reported increased turnover due to employee willingness to look for other opportunities.”

“Minnesota turkey producers were concerned about an outbreak of an extremely virulent strain of flu that has killed thousands of birds; the state is the nation’s largest producer of turkeys.”

• While oil drilling has been curtailed, contacts in the Cleveland area said the number of drilling rigs across the district declined 25% since mid-December, but production remains at high levels. One industry executive reported that “even with the current low prices for oil and natural gas, there is still a lot of industry optimism surrounding the Marcellus and Utica shales.”

• In the Dallas Fed region, “an oilfield machinery manufacturer laid off 10% of its workers in response to plummeting demand, and the company expects to lay off another 10% next month. Oil and gas producers and oilfield service firms continued to cut their workforce as low oil prices forced deeper cost cutting, although many contacts expressed confidence that industry employment declines will be temporary.”

• In San Francisco-region areas with active residential construction, “demand for engineering and architectural services was strong, with larger backlogs than at any time since before the recession.”

• A rancher in western Arkansas also noted that the ground is wetter than it has been in over 25 years. As a result, Arkansas and Mississippi farmers said they are significantly behind in their corn plantings as of late March due to very wet conditions. “Persistent wet conditions may motivate farmers to switch additional plantings of corn to soybeans due to a later sowing window for soybeans.”

 

Related reading:

Beige Book: U.S. Economy Powers Through Headwinds

Fedspeak: What’s the Difference Between ‘Modest’ and ‘Moderate’?

What Wal-Mart’s Pay Raise May Mean For Other Workers

Winter Snow Weighs on First-Quarter GDP

Oil Layoffs Hit 100,000 and Counting

 


 


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15 April 2015 | 6:18 pm – Source: blogs.wsj.com

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