US economy and its Sweet troubles!
The Beige Book is a report by US Federal Reserve (FED), as an overall review of economic condition, be released eight times each year before meetings the Federal Open Market Committee (FOMC). Since it is one of the most valuable tools at the committee’s disposal for making key decisions about the economy, investors and market participants must be watching that closely. FOMC members usually use the Beige Book Data compiled by the 12 district banks about economic conditions in their respective regional economies.
Yesterday we had the latest report of the Beige Book, which reported 10 days ahead of the next FOMC meeting on November 2-3. A published report shows that overall Outlooks for the short-term economic activity remained positive, even though some states noted increased uncertainty and more cautious optimism than in previous months. This caution optimism is mostly due to the effects of viruses, uncertainty, and supply, and optimism is more cautious than in previous months. This caution is seen mostly in the states that had raised in the COVID cases, while some other states have seen continued or strengthening leisure travel.
In terms of employment, labor shortages and high employee movement rates are still major issues. In this scenario, most regions reported strong wage growth, reflecting the efforts of employers to retain existing employees or recruit employees. In addition, the report shows that consumer spending in multiple regions has increased, reflecting the release of demand. Overall, the majority of Districts reported robust wage growth.
Finally, given that the Beige Book reflects the Fed’s overall positive attitude, we can expect that FED members still will continue their idea of faster tapering. When we have the next FOMC meeting, already we had the most of earnings reports, so the market will be calm after earnings reports and leave its quick and emotional reactions and then with hawkish decisions that are expected to see in the meeting, weakness in the stock markets and stronger US dollar can be the result.
