Looking at the Fed's Dual Mandate from a Beige Book Perspective
In social settings, I am often asked the same question by friends and family: "What exactly is the purpose of the Fed?" After experiencing several of these instances, I began to realize that not very many people know the answer to this question. In fact, the answer is quite simple—the Federal Reserve System conducts monetary policy by focusing on two primary objectives: maximizing employment and maintaining price stability. Because of our dual mandate, you will almost always find these two topics mentioned in the reports we issue. For instance, each time the Beige Book—more formally known as the Summary of Commentary on Current Economic Conditions—is written, an entire section is dedicated to employment and prices as you will see from the most recent release on August 29.
In regards to employment, the national summary stated that "hiring was said to be modest across the Districts," while our report said "hiring activity remained muted across the District."
As for prices and wages, the national summary found that "several Districts noted concerns about rising agricultural commodity prices" and "wage pressures were characterized as contained." We said, "Some contacts said that they had experienced lower overall input prices, but rising food prices was a concern" and "wage pressures remained in check."
Based on these reports, it appears that similar trends have been occurring for employment and prices, both locally and nationally.
Other important sector highlights from the Atlanta Fed's Beige Book include:
- Most retailers indicated that sales growth had slowed, with the exception of autos, which remained quite positive. Tourism contacts continued to report strong activity in all segments except cruise lines.
- Residential brokers and builders noted improvement in home sales and construction. New and existing home sales prices were reported to be modestly higher than year-ago levels. Commercial builders continued to note improvement, driven by the multifamily sector.
- Manufacturers reported a pullback in new orders and production levels.
- According to banking contacts, loan demand remained low but some improvements were registered in home mortgages, and auto lending was brisk.
The next Beige Book will be published October 10.
By Shalini Patel, a senior economic research analyst in the Atlanta Fed's research department
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