Highlights of the Fed’s Beige Book: Overall economic activity increases slightly since May

Overall Economic Activity:

  • Overall economic activity experienced a slight increase since late May.
  • Five districts reported slight/modest growth, five saw no change, and two noted slight/modest declines.
  • Consumer spending patterns were mixed, with growth seen in services but a shift away from discretionary spending in some areas.
  • Tourism and travel activities were strong, predicting a busy summer season.
  • Auto sales remained constant or showed moderate growth in most districts.
  • Manufacturing activity increased in half of the districts, while the other half saw a decline.
  • Transportation activity was mostly down or flat, attributed to high inventory levels and labor shortages.
  • Banking conditions remained subdued, with a continuing decrease in lending activity.
  • Despite higher mortgage rates, demand for residential real estate held steady, but sales were limited by low inventories.
  • Both residential and commercial construction activity was slightly down.
  • Geographically mixed agricultural conditions softened overall, with an expectation for more softening throughout 2023.
  • Energy sector activity decreased.
  • The economic forecast for the upcoming months anticipates slow growth.

Conclusion: A lot of mixed in overall economic activity.


  • Employment increased modestly across most Districts.
  • Labor demand remained healthy, with some reports of hiring becoming more targeted and selective.
  • Employers continued to face challenges in finding workers, particularly in healthcare, transportation, hospitality, and for high-skilled positions.
  • Many Districts noted improved labor availability, with some employers finding it easier to hire than previously.
  • High turnover rates experienced in recent years appear to be returning to pre-pandemic norms.
  • Wage growth continued but at a more moderate pace, with multiple Districts reporting wage increases returning to or nearing pre-pandemic levels.

Conclusion: Labor remains strong but off the boil


  • Prices increased overall at a modest pace, with several Districts observing a slowdown in the pace of increase.
  • Consumer prices generally increased, although reports varied on the ability of firms to pass along input cost increases.
  • Some Districts reported reluctance from firms to raise prices due to heightened consumer price sensitivity.
  • Other Districts noted that solid demand enabled firms to maintain margins despite rising costs.
  • Input cost pressures remained high for service firms, but notably eased in the manufacturing sector.
  • Freight rates and the prices of many construction inputs continued to decrease, while concrete prices increased.
  • Over the next several months, price expectations were generally stable or lower.

Conclusion: A tilt to the downside

Looking at the districts:

  • Boston: Business activity expanded slightly. Employment gains were small, prices were stable, and consumer spending increased marginally.

  • New York: Regional economic activity stabilized after a period of weakness. Labor market conditions were strong, and inflationary pressures eased noticeably.

  • Philadelphia: Business activity continued to decline slightly. Employment fell slightly despite improved labor availability.

  • Cleveland: The economy was generally stable. High interest rates continued to constrain households’ big-ticket goods purchases and businesses’ project plans.

  • Richmond: The regional economy grew slightly. Consumer spending on retail goods, as well as on travel and tourism, picked up modestly.

  • Atlanta: Economic activity grew slowly. Labor markets became less tight, and wage pressures eased.

  • Chicago: Economic activity was little changed. Employment increased moderately, and consumer spending was flat.

  • St. Louis: Economic conditions remained unchanged. Employers continued to struggle finding skilled workers, but turnover slowed and wage pressures lessened.

  • Minneapolis: Economic activity in the region grew slightly. Employment rose moderately as labor availability improved.

  • Kansas City: Total economic activity changed little during June. Hiring was flat, expected employment levels at most businesses continued to point downward.

  • Dallas: Modest expansion continued buoyed by gains in the service sector and single-family housing. Employment rose moderately, and wage growth remained high.

  • San Francisco: Economic activity softened modestly. Labor availability improved across sectors. Wage growth slowed notably while price increases persisted.

This article was written by Greg Michalowski at www.forexlive.com. Source