Showing posts with label atlanta fed. Show all posts
Showing posts with label atlanta fed. Show all posts

Saturday, December 4, 2021

Atlanta Federal Reserve Bank continues to believe that inflation will ease

 The Federal Reserve Bank of Atlanta has released a summary of economic conditions in the Southeast U.S. ahead of the next Federal Open Market Committee meeting on December 14-15, 2021. 

According to the Atlanta Fed, expectations remain that price pressures will ease in 2022. For the 12 months ending in October, the Atlanta area saw inflation rise by 7.9 percent, the largest 12-month increase since 1982. 

Prices. “Nonlabor costs continued to increase, and inputs such as raw materials, the availability of which remained exacerbated by supply chain disruptions, rose significantly. Several contacts reported that costs of freight and construction materials increased multiple times over the last year. Pricing power was strong, though contract negotiations were resulting in shorter terms. Most contacts expect cost pressures to ease steadily over 2022 but remain above pre-pandemic levels. The Atlanta Fed's Business Inflation Expectations survey showed year-over-year unit costs were relatively unchanged in November at 3.6 percent. Year-ahead expectations increased to 3.3 percent in November, up from 3.1 percent in October. Both measures have increased sharply over the last nine months” 

In other matters, the bank found strength in several parts of the regional economy.

Housing and Construction. “Although still strong, housing demand moderated further from the record highs experienced over the past year. Nonetheless, the recent uptick in mortgage interest rates led to an improvement in residential sales, spurred by homebuyers' expectations that interest rates will rise further. On a year-over-year basis, home prices increased sharply in markets like Atlanta, Nashville, and central and south Florida.” 

Manufacturing. “District manufacturers continued to report healthy demand over the reporting period, with several noting record sales. Lead times for components were extended as supply chain interruptions persisted, hampering production for some firms. Most manufacturers anticipate stronger sales over the next 6-12 months; however, lingering labor shortages, rising input costs, and disrupted supply chains could challenge firms' ability to meet this demand.” 

Transportation. “Transportation activity remained robust over the reporting period. District ports reported continued growth in container volumes, noting that customers were buying safety stocks of inventories, citing a "just in case, rather than just in time" approach. However, containers were slow to move off port due to a lack of chassis and trucks.” 

Banking and finance. “District banking activity remained steady. Financial institutions experienced stronger consumer and residential mortgage loan growth, and improved CRE loan demand. Although margin pressures remained due to the low interest rate environment, interest income rose as loan demand strengthened. Deposit levels were stable and remained elevated. Asset quality was unchanged with loan losses and net charge-offs still near historical lows." 

Agriculture. “Agricultural conditions remained mixed. Most of the District remained drought free. Agriculture producers indicated supply chain issues and labor scarcity are putting pressure on margins. On a year-over-year basis, production forecasts for the District's corn and soybean crops were up while rice, peanuts, cotton, and sugarcane forecasts were down. The USDA reported year-over-year prices paid to farmers in September were up for corn, cotton, rice, soybeans, cattle, broilers, eggs, and milk.” 

Beige book reports for all the Federal Reserve banks are available here.

Tuesday, January 19, 2021

Atlanta Federal Reserve Bank finds “modest” expansion of economic activity in the South through the end of December 2020

 


The Federal Reserve Bank of Atlanta is reporting that economic activity continued to expand at a modest pace from mid-November through December in its district, which includes the states of Alabama, Florida, and Georgia, and portions of Louisiana, Mississippi, and Tennessee.

The bank, headquartered in Atlanta, reported that over the period of mid-November through December:

  • Labor markets continued to gradually improve
  • Wage pressures were muted
  • Nonlabor costs related to construction and supply chains were rising
  • Sales at auto dealers declined
  • Tourism and hospitality activity softened
  • Residential real estate demand remained strong
  • Residential mortgages showed an uptick in delinquencies
  • Commercial real estate markets remained soft
  • Manufacturing activity rose modestly
  • Banking conditions were stable 

Labor conditions 

Consistent with the findings of the U.S. Bureau of Labor Statistics, the Atlanta Fed found that overall employment levels had risen over the past months, although they stayed below the levels reached a year ago. 

Labor shortages were faced by trucking companies, while manufacturers and technology companies were reporting increased hiring. At the same time, some restaurants reported that they were layoff staff. Professional and business services firms were reluctant to hire even with increased business because they were uncertain about future business, as the coronavirus impacts the overall economy. 

Prices 

The Atlanta Fed found moderate price inflation since its last report. Both manufacturing and service sector firms saw price inflation for their goods and services. Service sector firms reported high prices for their inputs but slowed slightly for manufacturers. 

Inflation of prices paid outpaced that of prices received, according to firms. Prices rose for raw materials and longer lead times were required, particularly for materials used in construction. Some firms reported higher costs for personal protective equipment, also related to the coronavirus epidemic. 


These comments and others are provided by the Federal Reserve Bank of Atlanta as its contribution to the Federal Reserve’s Summary of Commentary on Current Economic Conditions by Federal Reserve District, commonly known as the “Beige Book”. 

The report is published eight times a year in advance of Federal Open Market Committee meetings. The FOMC makes decisions about interest rates and the growth of the U.S. money supply. The first meeting of 2021 will occur January 26-27, 2021.

 A complete report of the Beige Book for all Federal Reserve districts is available at https://www.federalreserve.gov/monetarypolicy/beigebook202101.htm.