00:00Stuart, I don't know if you had a chance to see any of the headlines or if you can talk
00:03about it.
00:04All right, Stuart, what's sort of the big takeaway at the moment from these headlines?
00:08What matters most is what evolves between each base book.
00:12So the last base book that we had was in April. Today we have one for June.
00:15As of last April, economic activity was expanding in just eight of the 12 Federal Reserve districts.
00:20Lately, most lately, economic activity has been expanding in 10 out of the 12 Federal Reserve districts.
00:25So a little bit more growth dynamic taking place as we move further into the second quarter.
00:30On the inflation front, it was the case that prices were increasing at a moderate pace in April.
00:38Now moderate to strong across all the districts.
00:40Labor market front, labor market is softening between beige books.
00:44In the previous report, activity headed or labor market activity, the pace of hiring, had increased in all but one
00:51of the Federal Reserve districts.
00:52Now there's little to no change in all but one district.
00:55And in that one district, activity is cooling.
00:58What about signs of consumer financial strain?
01:01What are you seeing on that end?
01:02Because that's one of the things you were keeping a close eye on.
01:05Well, so look, the consumer is stretched, then tax refunds have helped.
01:09We have seen nominal spending continuing basically at pace.
01:12But real economic activity, real economic activity on the consumer spending front is a little bit more fragile right now.
01:20That's certainly the case.
01:21Alexis, you know, everyone talks about the K-shaped economy.
01:24And when I read one of the notes this morning by Vincent Delawarte of Stonex, he actually talked about the
01:29splintering within the upper K.
01:31So, I mean, just because you're in the top end of the K, so to speak, doesn't mean that, you
01:34know, you feel like you're loaded and like money is great.
01:38They're headed over to Dollar General and Family Dollar, right?
01:40They're shopping at those places.
01:41Does this report tell us anything at all about gas prices?
01:45Because we know that so many Americans are now grappling with, you know, such high gas prices.
01:49A little bit, but beyond gas prices, consumers are just focusing on those necessities because they are stretched thin by
01:56things like elevated gasoline prices.
01:58So not only are there fewer discretionary trips to or fewer trips to discretionary retailers, but there are notes that
02:05consumers are focusing on necessities.
02:07And there are also notes that consumers are depending more on credit cards so that they can afford those necessities.
02:13You know, Fed Bank of New York President John Williams said he sees no obvious path or direction for the
02:19path of future interest rates.
02:20I'm wondering if this beige book gives him any more clarity on that path.
02:24Well, when I look district to district and I think about the preferences of each regional bank president, the beige
02:32book gives us an opportunity to think about what's going on specifically in Williams District in New York,
02:37where both retailers and businesses are noting that economic activity is still strong and there's been a marginal improvement in
02:45manufacturing activity in New York.
02:46So to see a rotation from a relative dove like John Williams to a more balanced position, it's actually totally
02:53reflecting what's going on in his district.
02:55I want to bring Tom Keene in here, bow tie and all, for his thoughts on this beige book.
02:59It's fascinating. What's so cool about this is how twisted Stuart Paul is.
03:02I mean, when you do George Mason economics, it's different than everybody else.
03:07The heritage of your academics is it's a free economy.
03:11Are we just getting a stimulus ride right now or is it really innovation?
03:15Ned Phelps of Columbia's dynamism.
03:18Definitely. We're getting some support from stimulus.
03:21Tax refunds are carrying consumers through right now, and that's definitely the case in the face of higher gasoline prices.
03:27And look, let's face it.
03:28There's a reason why a lot of the voting FOMC presidents, the regional bank presidents, are incrementally hawkish.
03:35We're looking at people like Kashkari, Logan and Hammock.
03:38All the markets-oriented folks.
03:40They're all the George Mason types.
03:41Well, they're the folks who see basically no signs of monetary policy restrictiveness in financial markets.
03:51And when that's the case, yes, there is stimulus that is supporting economic activity.
03:55And that's what's giving us this hot headline that activity is increasing in more of the districts around the country.
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