The Beige Book for May

For those that do not know, this is the name of the Fed’s regional condition summary (available here). The Ninth District summary (which includes North Dakota) concludes that economic performance is mixed. Strength came from manufacturing, energy and mining, consumers, and a few others. The weaker sectors included construction, farming and real estate.

Now that summary is across the entire district, but the agricultural problems are potentially concerning. There are serious spillover effects from problems in the agriculture sector. In particular, depending on crop commitments, it may be the case that farmers have incomplete abilities to adjust as they would prefer. If they cannot avoid planting certain crops, and these crops become less profitable, the adjustment is likely to come in the form of reduced spending elsewhere than on the production of that particular crop. This is where all types of inefficiencies can occur.

The way the winter refused to end was potentially problematic for many industries in North Dakota and the district as a whole. What remains to be seen is whether these represent total losses or just a case of pent-up demand that will eventually be satisfied with purchases.

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