The Beige Book still not squaring with 2.5-3% GDP growth/Earnings comments/Ebullient sentiment

The confusion about the overall state of the economy continues after reading the new Beige Book from the Fed. On one hand, we just saw the updated Q3 GDP figure holding at 2.8% but on the other hand this was the first sentence of yesterday's Beige Book, "Economic activity rose slightly in most Districts." 'Slightly' to me sounds more like a one handle on growth, not two. Also, "Three regions exhibited modest or moderate growth that offset flat or slightly declining activity in two others." The upside in the report was the newfound confidence post election on the economy, "Though growth in economic activity was generally small, expectations for growth rose moderately across most geographies and sectors. Business contacts expressed optimism that demand will rise in coming months." 'Small' by the way doesn't sound like 2.5-3% growth either. I think the massive amount of government spending is really distorting the data.

Specifically on the consumer, "Consumer spending was generally stable. Many consumer-oriented businesses across Districts noted further increases in price sensitivity among consumers, as well as several reports of increased sensitivity to quality."

On the labor market, and more evidence of the slowdown in hiring that the Fed has its ears perked up for, "Employment levels were flat or up only slightly across Districts. Hiring activity was subdued as worker turnover remained low and few firms reported increasing their headcount." On the other hand, as seen by the low level of initial jobless claims, "The level of layoffs was also reportedly low. Contacts indicated they expected employment to remain steady or rise slightly over the next year, but many were cautious in their optimism about any pickup in hiring activity."

It also mentioned that wage growth "softened to a modest pace across most Districts" but "Job growth and wage growth for entry-level positions and skilled trades were an exception, rising robustly and expected to grow further through next year."

On inflation, while "Prices rose only at a modest pace...Input prices were said to be rising faster than selling prices for most businesses, resulting in declining profit margins. Although input prices rose generally, contacts in several Districts noted declines in certain raw materials and non-labor costs. In contrast, rising insurance prices were again reported widely as significant cost pressures for many businesses. Contacts indicated they expect the current pace of price growth to persist, but businesses in several Districts indicated tariffs pose a significant upside risk to inflation."

Here is what some companies in Corporate America said over the past few days on the state of things via a conference and earnings calls.

From Dow, speaking at a conference on Tuesday: