Most reports from around the country indicate "a high level of economic activity and further expansion recently, though with moderation in growth for some regions and sectors," the Fed said.
Looking forward, many of the Fed's 12 regional banks said growth was "beginning to temper" because of labor shortages, shipping bottlenecks and continued weakness in East Asia.
The strike against General Motors, weak demand for exports and "a general slowing in the high-tech sector" had dampened the expansion, the Fed said.
The Fed produces its Beige Book about two weeks before each meeting of the policy-setting Federal Open Market Committee. The most recent report was prepared by the Federal Reserve Bank of San Francisco based on information collected before July 27.
The report gives little reason to believe that the FOMC will raise or lower interest rates at its Aug. 18 meeting. Inflation is not even mentioned in the summary until the sixth and final page, when the Fed reports that "wage increases remained limited," while "goods prices remained stable."
"Manufacturers and retailers reportedly cannot sustain price increases in the current competitive environment," the report said.
However, the report is full of references to tight labor markets, which could lead to higher prices if companies can pass on the costs of recruiting and keeping good workers.
"All districts reported that labor markets remained tight in recent weeks," the report said. The Fed noted shortages of both skilled workers and entry-level workers.
Consumer spending "remained robust" in most regions and inventories "generally were characterized as balanced," the report said. Construction activity remained strong, and loan demand and credit conditions were healthy. The outlook for agriculture was mixed, with drought in the South and low prices clouding the picture.
Written By Rex Nutting