WASHINGTON — The nation’s economy is showing signs of continuing improvement, the Federal Reserve reported Wednesday in its Beige Book, while confirming what many have suspected: Sales of luxury goods are on the rebound.
In the mostly upbeat report from the Fed, based on business interviews conducted by its 12 regional banks during December and early January, luxury sales, including apparel, were reported “especially strong” in the New York, Philadelphia, Atlanta and San Francisco regions.
The San Francisco region, covering California, Arizona, Hawaii and the Pacific Northwest, was singled out as having the strongest economic activity. This is a turnaround for these areas, which have been reporting lackluster activity for months. On the other end of the spectrum, showing slow-to-modest economic activity, were regions covered by the Cleveland, Chicago and Dallas banks “and St. Louis said conditions were mixed.”
Nonetheless, the Fed said, “all districts reporting on expectations for future retail sales anticipate continued improvement” and said inventories “were generally in good shape.”
The Fed also noted that manufacturers, which for more than two years have faced lackluster sales, are reporting increases in business. An increase in technology manufacturing, in particular, was cited by the Boston, Dallas and San Francisco districts. In another positive sign, the Fed said, “manufacturers across the country generally expect factory conditions to continue to improve in the months ahead and several districts noted that capital spending in 2004 will be somewhat higher than in 2003.”
However, a lack of new hires throughout the country continues to persist, a signal the economy has yet to entirely shake off its doldrums. Labor market improvements “took the form of reduced layoffs or modestly increased hiring, although new hiring was still quite minimal in several districts and most types of workers remained easy to recruit,” the Fed said.