Washington, DC, March 10--The Federal Reserve Beige Book, released yesterday, noted that steady consumer spending and continued factory output boosted the economy in February.
The report said that all twelve districts indicated that economic activity has increased.
Consumer spending was steady to modestly higher, and almost all districts reported continued expansion in factory activity.
Labor markets across the country "have been steady to stronger" since the previous report in January. There were scattered reports of skilled-labor shortages in many regions.
The report gave a mixed reading on inflation.
Overall, "retail prices were generally flat or up modestly," the Fed said.
However, a number of the 12 Fed districts reported "persistent pressures on input costs" although some noted that these pressures have eased since January.
"Sustained increases in the cost of energy, steel and other materials were widespread," the Fed said.
A number of districts also reported greater ease in passing along price increases.
Wage increases remained moderate in February, although businesses continue to complain about the sharp rise in the cost of benefits.
The Beige Book was prepared for the central bank's Federal Open Market Committee ahead of its March 22 policy meeting. It is based on interviews and reports from hundreds of businesses throughout the nation through Feb. 28.
The market has fully priced in another quarter-percentage point increase in interest rates, which would bring the benchmark Fed funds rate to 2.75 percent.
"Bottom line: The economy is not slowing down -- if anything, momentum may be building. Inflation is not accelerating out of control, but the Fed's projection of stable core consumer price inflation over the next 2 years is looking more and more like wishful thinking," Stanley said.
