Last updateWed, 24 May 2017 2pm


Fed Beige Book Showing Continued Economic Expansion

Economic activity increased in each of the twelve Federal Reserve Districts between mid-February and the end of March, with the pace of expansion equally split between modest and moderate. In addition, the pickup was evident to varying degrees across economic sectors.

Manufacturing continued to expand at a modest to moderate pace, although growth in freight shipments slowed slightly. All ten contacted manufacturers said sales were higher in recent periods versus the comparable period a year ago. Most contacts reported that capital expenditures were confined to maintenance of existing equipment. Several contacts expressed concerns about policy uncertainty. Firms said that a Border Adjustment Tax would have mixed effects but hoped for some resolution. 

IMF Raises Global Growth Forecast to 3.5% This Year

Global economic activity is picking up with a long-awaited cyclical recovery in investment, manufacturing and trade, according to the IMF’s World Economic Outlook. World growth is expected to rise from 3.1% in 2016 to 3.5% in 2017 and 3.6% in 2018. Stronger activity, expectations of more robust global demand, reduced deflationary pressures, and optimistic financial markets are all upside developments. But structural impediments to a stronger recovery and a balance of risks that remains tilted to the downside, especially over the medium term, remain important challenges. 

U.S. Industrial Production Rose 0.5% in March

Industrial production increased 0.5% in March after moving up 0.1% in February. The increase in March was more than accounted for by a jump of 8.6% in the output of utilities—the largest in the history of the index—as the demand for heating returned to seasonal norms after being suppressed by unusually warm weather in February. Manufacturing output fell 0.4% in March.

For the first quarter as a whole, industrial production rose at an annual rate of 1.5%. At 104.1% of its 2012 average, total industrial production in March was 1.5% above its year-earlier level. Capacity utilization for the industrial sector increased 0.4% in March to 76.1%, a rate that is 3.8% below its long-run (1972–2016) average. 

AGC: "Buy America" Could Push Materials Cost Up Further

Double-digit price increases for key construction materials pushed up construction costs in March, while the prices charged by contractors remained moderate, according to a new analysis of federal producer price data released today by the Associated General Contractors of America (AGC).

From March 2016 to March 2017, there was a 4.4% rise in the producer price index for goods used in construction. AGC warns that the “Buy America” provision currently being pushed in Washington could add to this increase. 

Texas Economy Forecast to Pick Up in 2017

Amid an energy sector recovery in the second half of 2016, the Texas economy is positioned to return to its long-term pace of growth this year. However, a significant change in oil prices or further weaknesses in manufacturing remain risks to the outlook, write Keith R. Phillips and Christopher Slijk in the latest issue of Southwest Economy.

“Although energy prices are not expected to rise significantly in 2017, optimism among energy company executives has surged, and drilling activity is expected to pick up.” 

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