Fed Beige Book Shows Modest Economic Expansion: Energy Prices On The Rise, 'Sharp Increases In Insurance Rates'

The latest Federal Reserve Beige Book report released Wednesday shows a slight expansion in overall economic activity, with 10 of the 12 districts showing growth, a mild improvement from previous findings.

Consumer spending displayed minimal growth, manufacturing activity declined slightly and employment rose modestly.

Several regions noted a cautiously optimistic economic outlook.

Key Details From April Fed Beige Book

Consumer Spending, Retail

• Consumer spending saw a negligible overall increase, affected by heightened price sensitivity among buyers.
• Discretionary spending remained weak, although automotive spending surged in some areas due to better inventories and incentives from dealers.
• Tourism showed a modest rise, although this varied significantly by district.

Manufacturing, Services

• The manufacturing sector experienced a slight downturn with only three districts reporting growth.
• Nonfinancial services displayed slight improvement, contrasting with flat performance in banking and lending services.

Construction, Real Estate

• Residential construction saw minor growth, with home sales strengthening in most districts.
• Nonresidential construction did not show progress, and commercial real estate leasing dipped slightly.

Employment, Wages

• Employment trends were slightly positive, with most districts reporting slow to modest increases.
• Wage growth was moderate in eight districts, with signs of stabilization as annual wage growth rates realign with historical averages.

Prices

• Price hikes were modest and consistent with previous reports despite disruptions like the Red Sea blockage and the Key Bridge collapse in Baltimore.
• Energy prices rose moderately in half of the districts, while several districts reported “sharp increases in insurance rates.”
• Firms reported diminished ability to pass on cost increases to consumers, affecting profit margins.

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