The Fed sees good things ahead

WASHINGTON – The economy is gaining momentum, bolstered by home building, shipping and even the country’s beleaguered manufacturing sector, the Federal Reserve said Wednesday in a newly upbeat assessment.

Evidence of a strengthening economy showed up in other reports as well, while Wall Street hailed a big drop in oil prices.

The Commerce Department said consumer spending shot up by 0.7 percent in October, the best showing since July, as Americans’ incomes – the fuel for future spending – rose by 0.6 percent. The gain in incomes reflected the increase of 337,000 payroll jobs in October, the best in seven months.

Meanwhile, the Institute for Supply Management reported that its main index for measuring industrial activity performed better than expected, rising to 57.8 in November from 56.8 in October.

Wall Street took encouragement not only from the upbeat economic reports but also from the biggest one-day drop in crude oil prices in three years. Crude oil fell by $3.64 per barrel to settle at $45.49, its lowest level in New York trading since Sept. 16.

Relieved investors pushed the Dow Jones industrial average up by 162.20 points, the third best one-day gain of the year. The Dow finished the day at 10,590.22, its highest close since early March.

The Federal Reserve said that reports from its 12 regions “generally paint a picture of continued economic growth” from mid-October through mid-November, with improvements noted in a number of areas.

In fact, the Fed survey said 11 of its 12 regions reported expanding economic activity, with only the Cleveland district seeing little change.

The Fed’s latest “Beige Book,” named for the color of its cover, will be used when policy-makers meet for their last discussion of the year on Dec. 14. It is widely expected that the Fed will raise interest rates for a fifth straight time this year in an effort to make sure the rebounding economy does not trigger inflation.

The reviving economy has been having an effect on inflation in such industries as energy, transportation and food, but the Fed said retailers are still having difficulty passing those increased costs on to consumers because of stiff competition.

The Fed survey showed rising demand for manufactured goods, encouraging news for a portion of the economy that has seen the loss of 2.7 million jobs over the past four years.

There was rising demand for chemicals, food and a variety of products used in the aerospace, agriculture, energy, construction, medical and defense industries, the report said.

The rebound in manufacturing was helping job markets, and some areas of the country were even experiencing labor shortages for such occupations as accounting, construction and skilled professionals in the energy industry.

As for consumer spending, analysts said the 0.7 percent jump after a strong 0.6 percent rise in September showed that consumers, who account for two-thirds of total economic activity, were getting a second wind.

“Consumers were not deterred by higher oil prices and by consumer confidence numbers that keep on going lower,” said Ken Mayland, president of ClearView Economics.

Talk to us

More in Herald Business Journal

Members of Gravitics' team and U.S. Rep. Rick Larsen stand in front of a mockup of a space module interior on Thursday, August 17, 2023 at Gravitics' Marysville facility. Left to right: Mark Tiner, government affairs representative; Jiral Shah, business development; U.S. Rep. Rick Larsen; Mike DeRosa, marketing; Scott Macklin, lead engineer. (Gravitics.)
Marysville startup prepares for space — the financial frontier

Gravitics is building space station module prototypes to one day house space travelers and researchers.

Orca Mobility designer Mike Lowell, left, and CEO Bill Messing at their office on Wednesday, Aug. 16, 2023 in Granite Falls, Washington. (Olivia Vanni / The Herald)
Could a Granite Falls startup’s three-wheeler revolutionize delivery?

Orca Mobility’s battery-powered, three-wheel truck is built on a motorcycle frame. Now, they aim to make it self-driving.

Catherine Robinweiler leads the class during a lab session at Edmonds College on April 29, 2021. (Kevin Clark / The Herald)
Grant aids apprenticeship program in Mukilteo and elsewhere

A $5.6 million U.S. Department of Labor grant will boost apprenticeships for special education teachers and nurses.

Peoples Bank is placing piggy banks with $30 around Washington starting Aug. 1.
(Peoples Bank)
Peoples Bank grant program seeks proposals from nonprofits

Peoples Bank offers up to $35,000 in Impact Grants aimed at helping communities. Applications due Sept. 15.

Workers build the first all-electric commuter plane, the Eviation Alice, at Eviation's plant on Wednesday, Sept. 8, 2021 in Arlington, Washington.  (Andy Bronson / The Herald)
Arlington’s Eviation selects Seattle firm to configure production plane

TLG Aerospace chosen to configure Eviation Aircraft’s all-electric commuter plane for mass production.

Jim Simpson leans on Blue Ray III, one of his designs, in his shop on Friday, August 25, 2023, in Clinton, Washington. (Ryan Berry / The Herald)
Whidbey Island master mechanic building dream car from “Speed Racer”

Jim Simpson, 68, of Clinton, is using his knowledge of sports cars to assemble his own Mach Five.

Inside the new Boeing 737 simulator at Simulation Flight in Mukilteo, Washington on Wednesday, Sept. 20, 2023. (Annie Barker / The Herald)
New Boeing 737 simulator takes ‘flight’ in Mukilteo

Pilots can test their flying skills or up their game at Simulation Flight in Mukilteo.

An Amazon worker transfers and organizes items at the new PAE2 Amazon Fulfillment Center on Thursday, Sept. 14, 2023, in Arlington, Washington. (Ryan Berry / The Herald)
Amazon cuts ribbon on colossal $355M fulfillment center in Arlington

At 2.8 million square feet, the facility is the largest of its kind in Washington. It can hold 40 million “units” of inventory.

A computer rendering of the North Creek Commerce Center industrial park in development at 18712 Bothell-Everett Highway. (Kidder Mathews)
Developer breaks ground on new Bothell industrial park

The North Creek Commerce Center on Bothell Everett Highway will provide warehouse and office space in three buildings.

Dan Bates / The Herald
Funko president, Brian Mariotti is excited about the growth that has led his company to need a 62,000 square foot facility in Lynnwood.
Photo Taken: 102312
Former Funko CEO resigns from the Everett company

Brian Mariotti resigned Sept. 1, six weeks after announcing he was taking a six-month sabbatical from the company.

Cash is used for a purchase at Molly Moon's Ice Cream in Edmonds, Washington on Wednesday, Aug. 30, 2023. (Annie Barker / The Herald)
Paper or plastic? Snohomish County may require businesses to take cash

County Council member Nate Nehring proposed an ordinance to ban cashless sales under $200. He hopes cities will follow suit.

A crowd begins to form before a large reception for the opening of Fisherman Jack’s at the Port of Everett on Wednesday, August 30, 2023, in Everett, Washington. (Ryan Berry / The Herald)
Seafood with a view: Fisherman Jack’s opens at Port of Everett

“The port is booming!” The new restaurant is the first to open on “restaurant row” at the port’s Waterfront Place.