WASHINGTON — The economy picked up steam in recent months, with most areas of the U.S. posting “noticeable” increases in retail sales, the Federal Reserve said Wednesday in its Beige Book report.
The collection of economic anecdotes from businesses gleaned by the Fed’s 12 district banks from mid-February to early April also pointed to improvements in manufacturing throughout the country, although these reports were tempered by instances of raw material price increases.
The loss of manufacturing jobs in the last three years has been a weak link in the economy’s recovery from recession. The Fed singled out apparel production in Dallas as one sector adding workers.
The overall soft national jobs market may also be seeing a turnaround, with hiring being increased “moderately,” but with no real signs of increased wages that often accompanies more hiring. The Fed said overall wage increases were reported as “modest.” While “in the Boston district, wages for retail positions were mostly steady,” the Fed noted, “some retailers were implementing increases of 3 to 4 percent.”
Related Galleries
As for prices, although apparel wasn’t singled out, retailers in general reported less inventory to mark down and discounts being less frequent or deep.
Meanwhile, Fed Chairman Alan Greenspan told a Congressional panel Wednesday to expect short-term interest rates to increase in reaction to economic strengthening. “Looking forward, the prospects for sustaining solid economic growth in the period ahead are good,” according to Greenspan’s prepared testimony before the Joint Economic Committee.
Greenspan didn’t discuss the timing of increasing rates. Short-term rates of 1 percent are the lowest since 1958. Investors were pleased with Greenspan’s comments, and most sectors ended the day up. The S&P Retail Index finished Wednesday up 0.78 points to 393.22, a 0.2 percent increase over the prior close.
The Beige Book said in most regions retailers were optimistic about continued increases in sales, despite consumer-confidence surveys posting recent declines.
In the New York-New Jersey region, “Retailers report that sales were ahead of plan in March, as year-over-year same-store sales gains ranged from 5 to 12 percent,” the Fed in New York said. “Most contacts note particular improvement in apparel sales, despite relatively cold weather” and higher gas prices sopping up more disposable income.
However, in the Richmond, Va., metropolitan area, sales forecasts weren’t as bright due to the area being “oversaturated with retail businesses as a result of two regional malls opening six months ago” and where “a retail shakeout over the next year” is expected.
— Joanna Ramey