5 Takeaways On The Economy From The Fed's April Beige Book

The Federal Reserve has just released its April Beige Book, a qualitative evaluation of economic conditions in each Federal Reserve district that is published eight times a year.

Why It Matters: The Fed Beige Book gathers data through surveys and interviews with companies, community organizations, economists, market experts and others.

Since the information in the Beige Book may not be represented in existing economic statistics, it is a useful and additional source of information for the Federal Open Market Committee (FOMC) in order to assess monetary policy decisions. 

Read also: Economic Alarm Bells: A Recession Indicator Just Hit Levels Not Seen Since 1982

5 Takeaways From The Fed's April Beige Book:

1) Overall economic activity is little changed, but lending standards tightened: The vast majority of Districts indicated either no change or a modest change in current and future activity, while several Districts stated that banks tightened lending conditions in response to heightened uncertainty and liquidity worries.

2) Banking sector conditions worsened materially: Conditions in the broader financial industry deteriorated substantially, coinciding with recent banking sector stress. Regional banks reported broad loan demand decreases, continuous credit tightening and mildly growing mortgage delinquency rates.

3) Employment growth moderated, but wages remain elevated: Several Districts reported a slower pace of employment growth and increased labor supply. Despite some moderation in wages, they continue to remain elevated. 

4) Producer prices eased, but consumer prices stay high: Producer price pressures in nonlabor inputs modestly eased amid significantly lower freight costs in recent weeks. Wholesale price pressures in manufacturing and services sector both eased broadly. Consumer prices generally increased amid a strong demand. 

5) Housing market softened: In most Districts, rents and housing prices showed signs of softening amid growing buyer frustration over the lack of home affordability. Yet ousing prices remained quite expensive. Residential real estate sales and new construction activity softened modestly.

Benzinga's Take: The April Beige Book poll found early signs of credit tightening and some softening in the labor and housing market.  
Strong and robust consumer demand, particularly for the services sector, and solid U.S. household balance sheets, which have strengthened over the years of the pandemic,  suggest that a recession may not be as near as many assume.

Producer prices are beginning to fall, but consumer price pressures are not following suit. 

This may suggest the Fed has still some work to do on its course of rate hikes. 

Market Reactions: The SPDR S&P 500 ETF Trust SPY was unchanged for the day. Rates moved higher, with the yield on the two-year Treasury note reaching 4.26%, at the highest since mid-March 2023. 

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