Fed Reserve points to strengthened economy

The overall economy of the district, which comprises western Missouri, Nebraska, Oklahoma, Colorado, Wyoming, Kansas and northern New Mexico, expanded in late July and August, though at a slightly slower pace than in the previous survey.

The Beige Book is a collection of anecdotal information, published eight times a year, which is used as a general snapshot of the economy.

Consumer spending was up in the 10th District, as most retailers reported solid year-over-year sales increases. Those interviewed were especially pleased with sales of back-to-school items and appliances.

Growth also was strong in auto sales, though most dealers expect numbers to drop off after employee-pricing discounts are phased out. General Motors’ Employee Discount for Everyone program, which initiated similar programs from Ford and others, will end Sept. 30.

“Nationwide there was a surplus of inventory when this deal started, and now every dealer out there is low on inventory,” said William Mork, new car sales manager for Reliable Chevrolet, a GM dealer. “June and July were some of the best months (GM) has had since the ‘80s.”

The deal also had a profound effect for Springfield-based Thompson Pontiac-GMC-Cadillac-Saab, which reported in July that sales for June were double sales for June 2004.

Factory activity remained stronger than a year ago, but fewer plant managers reported increases in production, shipments and orders than in the previous survey. Some producers also are worried about the impact of high oil and gasoline prices on future sales.

In real estate, housing activity began to ease from previous surveys while commercial real estate continued to improve. Inventories of unsold homes were up considerably from a year ago in some markets while home price growth remained moderate in most cities.

Agricultural conditions have improved, as recent rains and cooler weather improved soybean crops, though little help is expected for corn yields.

The labor market strengthened slightly, as hiring announcements outpaced layoff announcements by a small margin.

Prices rose significantly, both on the retail and wholesale levels. Wholesale prices rose primarily due to increased costs of petroleum-based products.