At long last, the Fed’s Beige Book had some good news for investors and analysts: Economic activity has increased at a “slight to modest pace” in the majority of U.S. Federal Districts, per its January update.
Eight of the 12 regions in the Reserve System reported growth, while three reported no change and one reported a modest decline. “This marks an improvement over the last three report cycles where a majority of Districts reported little change,” the Beige Book reads.
The majority of banks also reported increased activity as a result of holiday shopping, the report added, though trends were in keeping with the K-shaped economy, which became so prevalent last year. The K-shaped economy describes the diverging fortunes between two sets of consumers: The bottom on a downward trajectory, the top trending upwards.
As the Beige Book described: “Several Districts also noted that spending was stronger among higher-income consumers with increased spending on luxury goods, travel, tourism, and experiential activities. Meanwhile, low to moderate income consumers were seen to be increasingly price sensitive and hesitant to spend on nonessential goods and services.”
