Investing.com – Economic growth expanded at a “modest to moderate” pace as wage growth gathered momentum, a Federal Reserve survey showed.
The central bank’s Beige Book economic report, based on anecdotal information collected by the Fed’s 12 reserve banks through the end of the year, noted most districts reported “moderate inflation” amid ongoing labor market tightness and higher wages.
“In many Districts, wage growth picked up to a moderate pace, the beige book report noted. “Most Districts saw employers raise wages and expand benefit packages in response to tight labor market conditions.”
While economic activity expanded at “modest to moderate pace,” consumer spending was described as "mixed," according to the report.
“Consumer spending was mixed, as non-auto retail sales increased in just over half of the Districts while auto sales declined or were flat in every District.”
The upbeat outlook on wage growth comes on the heels of Federal Reserve chair Jerome Powell’s testimony before the Senate last week, in which he said the central bank was cautious of falling behind the curve on inflation.
Core PCE, the Fed’s preferred measure of inflation, showed a reading of 1.5% For January, well below the Fed’s 2% target.
That said, however, market participants remained confident the Fed will hike rates at its March meeting.