Fed’s survey doesn’t cheer Wall Street
WASHINGTON — The Federal Reserve said Wednesday the U.S. economy kept expanding in the early spring, with tight labor markets and many businesses reporting rising wages.
But Wall Street wasn’t impressed.
In its latest survey of economic conditions nationwide, the central bank found that its 12 regional banks all depicted growth as either “modest or moderate” from mid-March through early April. The strength came from consumer spending, tourism, housing construction and manufacturing.
The report said businesses reported tight labor markets with more job turnover and bigger wage increases for workers whose skills were in short supply.
The Fed’s survey, the Beige Book, will be used when Fed officials next meet on May 2-3. The Fed raised rates by a quarterpoint in December and March, but analysts don’t expect a rate hike in May.
The Fed is continuing to project three rate hikes this year. Officials say they are close to achieving their goals of maximum employment and inflation rising at an annual rate of 2 percent.
But Wall Street found the Beige Book disappointing. Stocks gave up a promising start and finished mostly lower Wednesday as investors thought wage growth was still too slow. Energy stocks dropped with the price of oil.
Investors have been wondering when rising statistics like consumer confidence will start to turn into better pay and greater spending.
“Show me where those numbers are translating into something more than just feelings,” said Brent Schutte, chief investment strategist for Northwestern Mutual Wealth Management. “People are looking for evidence that these confidence numbers are translating into actual actions, and the Beige Book showed that over the last couple of months it’s been more of the same.”