By David Harrison and Paul Kiernan
American businesses see economy activity expanding modestly amid lingering fears over trade, according to a Federal Reserve report released Wednesday.
"The outlook generally was positive for the coming months, with expectations of continued modest growth despite widespread concerns about the possible negative impact of trade-related uncertainty," said the Fed's "beige book" survey, a report of anecdotes drawn from business contacts around the country by the central bank's 12 regional banks.
The report should reassure Fed officials that the economy is in little danger of tipping into recession anytime soon. Despite a healthy economy, Fed Chairman Jerome Powell signaled in congressional testimony last week that the central bank was ready to cut interest rates -- perhaps as soon as the July 30-31 meeting -- because of concerns about slowing global growth and trade tensions.
Businesses pointed to consumer spending as a strong point, despite flat vehicle sales. Home improvement stores in Oregon saw sales rising moderately, and a major apparel company based in the state said it expected demand to remain healthy. Retail sales have been rising for four straight months, according to the Commerce Department.
Tourism-industry participants were generally upbeat as well, except on Cape Cod where 20 days of rain in June dampened spirits. In Delaware, business contacts said traffic was "massive" over the July Fourth holiday with long waits for restaurants on a Tuesday night.
Manufacturers continued to express concern about the uncertainty surrounding trade negotiations. A maker of electronic components in the Northeast said it had laid off people in response to tariffs and moved an assembly line from the U.S. to Germany, where it could receive Chinese imports without paying tariffs.
Businesses continued to complain of shortages of worker. Some construction companies in Idaho debated relaxing drug testing for applicants. Wages grew at a modest-to-moderate pace, the report said, with some employers expanding benefit packages to draw workers.
Inflation pressures were slightly weaker from the previous reporting period, the report said. Some respondents noted competitive pressures prevented them from passing on increases in input prices.
Agricultural producers in the Midwest continued to suffer the consequences of spring floods. Many farmers in the Chicago area said it was too late to plant corn and soybeans, forcing them to plant less-profitable crops and file for insurance claims.
"I have been farming for 48 years no and this is the worst spring/summer planting season we have experienced," said an Indiana contact.
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(END) Dow Jones Newswires
July 17, 2019 15:03 ET (19:03 GMT)
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