Research
...tion into twelve regional districts to determine their decision to raise, lower, or maintain interest rates by studying the economic activity. The districts are broken into sectors to evaluate how each part of the market is controlling money supply. The information is gathered “through reports from Bank and Branch directors and interviews with key businessmen, economists, market experts” (Fed 2005). I looked throughout the Beige Book, as well at a few articles that were published after it came out in March. The month of February showed signs “growth as the employment climate improved, shoppers rang up sales and factories boosted production” (Business Report 2005). The data collected from the Fed's 12 regional districts during February also found that retail prices were "generally flat or up modestly" (Fed 2005). Consumers were spending enough to help the economy move ahead, with clothing sales performing particularly well. "Labour markets strengthened in almost all districts." (Fed 2005). Factory activity was reported as expanding solidly in most districts. "Vehicle production remained at a high level on strength in demand for heavy trucks.” (Smartmoney). As far as interest rates the market fully priced in another quarter-percentage point, which would bring the target Fed funds rate to 2.75 percent. "Bottom line: The economy is not slowing down -- if anything, momentum may be building. Inflation is not accelerating out of control, but the Fed's projection of stable core consumer price inflation over the next 2 years is looking more and more like wishful thinking" (Investors 2005). So in the case of inflation our company would not have to worry about it this year and we could build enough revenue to maintain a stable environment. Overall, “retail prices were generally flat or up modestly,” the Fed said. (TechNewsWorld 2005) However, a big portion of the 12 Fed districts reported “persistent pressures on input costs,” (Fed 2005) although some noted that these have eased since January. A number of districts also indicated greater ease in passing along price increases. Wage increases remained moderate in February, although businesses continued to complain about the sharp rise in the cost of benefits. As a conclusion to the research that I was tasked to make a decision on I feel that o...