The Fed also said most districts said non-auto retail sales expanded, but that several districts noted holiday sales were disappointing. New York, Cleveland, Minneapolis, and Dallas reported disappointing or slugglish consumer spending or retail spending through November and December.

But the most troubling news revolves around the threat to corporate margins because despite the "modest, moderate" growth, margin pressures were said to be building as input prices rose faster than final goods prices. Cost increases were reported for coal, natural gas, and selected building and manufacturing materials. At the same time, retailers’ selling prices were mixed, but on balance were flat or down amidst competitive discounting.