Fed Beige Book Reveals Mixed Economic Picture, Expectations For Slow Growth As Credit Softens

The much-awaited Fed Beige Book released Wednesday provides insights into the state of the economy, showing a slight increase in overall economic activity since late May but warning that a period of slow growth is approaching.

Among the 12 Federal Reserve Districts surveyed, only two – Philadelphia and San Francisco – reported a softening in economic activity. Five districts reported slight or modest growth, and five noted no change.

Tourism, Travel Boom; Credit Softens; Manufacturing, Energy Struggle

The survey paints a mixed picture of consumer spending, with growth primarily seen in consumer services, although some retailers observed a shift away from discretionary spending.

Despite this, tourism and travel activity remained robust, with a busy summer season anticipated. Manufacturing activity continued to face challenges and remained subdued. Banking conditions were flat and lending activity continued to soften.

While demand for residential real estate remained steady, low inventories constrained sales. Construction activities for both residential and commercial units experienced a slight decrease overall. Agricultural conditions varied geographically, with a slight softening observed overall.

Energy activity decreased, contributing to expectations of slow growth in the coming months.

Wage Increases Return To Pre-Pandemic Levels

Employment saw modest growth during the review period, with most districts reporting job gains.

Employers continued to encounter difficulties in finding workers, particularly in health care, transportation, hospitality and high-skilled positions. On a positive note, labor availability improved in several districts, making it somewhat easier for employers to hire.

Wage increases continued but at a more moderate pace, with reports indicating a return to pre-pandemic levels in multiple districts.

Price Hikes Stall

Some Fed districts reported hesitancy in raising prices due to increased price sensitivity among consumers. Yet solid demand allowed firms in other districts to maintain their margins. Input cost pressures remained elevated for service firms but eased notably in the manufacturing sector.

Overall, freight rates and construction input prices decreased, although concrete prices saw an increase. Price expectations for the upcoming months were generally stable or lower.

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This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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