We just got back from a great week off and I was pleased to see the strength in the markets while gone. To keep us grounded, let’s look at inflation and some Beige Book data offered by John Canally, CFA and Economist at LPL Financial.
The Beige Book and
“The Beige Book is a commonly used name for the Fed report called the Summary of Commentary on Current Economic Conditions by Federal Reserve District. It is published just before the FOMC meeting on interest rates and is used to inform the members on changes in the economy since the last meeting.
Today Vs. 40 Years Ago –
The excerpts to follow are from the most recent Beige Book (March 6, 2013) and from several 40 years ago, in the fall of 1972. Today, the inflation rate is right at 2.0%. In 1972, the inflation rate had decelerated to under 3.0%
after running as high as 6% in the late 1960s.
Even when compared to the mid 2000s – the last time the Fed began raising rates to keep a lid on inflation expectations – there is a noticeable difference in tone on the topic of employment, wages and inflation in the Beige Book today.” ~J. Canally
Let’s take a look. . .
Beige Book Excerpts
1972 – “Reports from some Banks indicate that concern over inflation remains strong. A number of New York’s directors cited the inflationary implications of the large and widening Federal budget and of the heavy calendar of wage negotioations in 1973.
A survey by Minneapolis found a significant increase in local firms reporting plant capacity as “less than needed.”
Labor market conditions generally continue to show improvement and some Districts are experiencing labor shortages.”
2013 – “The majority of Districts reported modest improvements in labor market conditions, although hiring plans were limited in several Districts.
Wage pressures were mostly limited, but some contacts reported upward pressure for skilled positions in certain industries due to worker shortages.
Price pressures remained modest, with the exception of certain raw materials and slightly higher retail prices in several Districts. Most District contacts did not plan to increase selling prices.”
Until next week,
Susan R. Linkous