‘Beige Book’ Shows Snapshots Of Economy’s Stress Points
April 17, 2024 04:36 PM EDT
While policymakers at the Federal Reserve rely on hard data while setting the nation’s monetary policy, they also seek out individual stories. The Beige Book, a twice-quarterly compilation of reports from around the country is an unusual government report in that it’s light on numbers and heavy on observations.
The latest edition, published Wednesday, provided a close-up view of how broader trends and even the movements of the solar system are affecting things on the ground.
For example, this tidbit from the Federal Reserve Bank of New York: “Visitors seeking the path of totality to observe the solar eclipse provided a sizeable boost to hotel and restaurant establishments in parts of upstate New York.”
Other reports noted how people were coping with inflation, which has stayed stubborn in recent months, interrupting the falling trend it had been on. In Minneapolis, a grocer found shoppers were “trading down on their purchases” buying “lots of staples and fewer splurges, and more store-brand or generics.”
Another common theme was how hard it is for people to find housing in a deadlocked housing market grappling with shortages of houses for sale despite a recent uptick. For example, the Federal Reserve Bank of Boston noted “employers on Cape Cod also faced challenges filling jobs, as rising housing costs priced more workers out of the Cape.”
Another omnipresent force was high interest rates, the result of the Federal Reserve’s efforts to quench inflation using monetary policy.
“A cabinet manufacturer reported that clients could no longer wait for interest rates to drop, so they were canceling projects,” the Richmond Fed reported. “A pump and commercial equipment producer reported a slowdown in sales because their customers delayed capital expenditures until interest rates decline.”
Biden Seeks Steep Tariffs Hike on Some Chinese Steel and Aluminum
April 17, 2024 11:12 AM EDT
President Joe Biden is looking to triple certain tariffs on imports of steel and aluminum from China, according to reports Wednesday.
The White House is looking to increase tariffs to 25% from 7.5%, as he aims to attract domestic workers ahead of the presidential election later this year. The new levies would be in addition to a separate 25% tariff on steel and a 10% duty on aluminum imposed by the Trump administration.
Chinese exports have surged recently while U.S. Treasury Secretary Janet Yellen has accused Beijing of creating excess capacity and cut-price goods on the back of the country’s strategy of turbocharging manufacturing.
Last month, President Biden voiced concerns about Nippon Steel’s proposed $14 billion all-cash acquisition of U.S. Steel announced in December. U.S. Steel shareholders approved the sale of the storied company to the Japanese firm but union opposition and ongoing regulatory reviews are raising doubts about the deal.
Read more about the reported tariffs here.
-Fatima Attarwala
Mortgage Applications Rise Despite Higher Interest Rates
April 17, 2024 11:12 AM EDT
More homebuyers applied to get mortgage loans last week, marking the second straight week that the application volumes rose alongside an increase in mortgage rates, according to data from the Mortgage Brokers Association.
Mortgage loan volume increased 3.3% for the week ending April 12, despite another jump in mortgage rates. The 30-year fixed-rate mortgage came in at 7.13% for the week, its highest level since December.
“Despite these higher rates, application activity picked up, possibly as some borrowers decided to act in case rates continue to rise,” said Joel Kan, MBA vice president and deputy chief economist.
Homebuyers were motivated by data showing the economy is still strong, even though inflation was proving to be more resilient than anticipated, Kan said. The persistent inflation has pushed Federal Reserve officials to consider keeping interest rates higher for longer than previously expected.
Most of the increased application volume came from purchases, which are still 10% lower than at this point last year, while refinancing was slightly higher as well.
-Terry Lane
