Beige Book: Economy expands in August; rate cut still expected

September 05, 2019

Beige Book: Economy expands in August; rate cut still expected

The Federal Reserve's Beige Book revealed that the economy expanded at a modest pace throughout August, even in the face of uncertainty related to trade policy and tariffs. However, NAFCU's Curt Long indicated that, due to the threat of a recession, the association expects another 25-point rate cut from the Federal Open Market Committee later this month.

"The economy is facing headwinds from a number of directions, most notably those involving trade and manufacturing," said Long, NAFCU's chief economist and vice president of research. "While the labor market and consumer spending are strong enough at the moment to keep growth in positive territory, it is slowing."

In addition, reports on consumer spending were not as positive although auto sales did grow modestly since the last report. The Fed said that employment and wages grew modestly, on pace with previous reports.

Other aspects of the Beige Report to note:

transportation activity softened in the last quarter which was largely attributed to slowing global demand and heightened trade tension;
home sales remained constrained largely due to low inventory while new home construction remained flat;
overall manufacturing was down from the previous report; and
prices increased modestly since the last report.

Access the full Beige Book here.

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