On Wednesday, the Federal Reserve indicated in its latest "Beige Book" report that since early September, economic activity in most regions of the United States has remained largely unchanged, with two Federal Reserve districts reporting moderate growth. Reports on consumer spending were mixed, with some districts noting changes in the structure of consumer purchases, mainly shifting towards cheaper alternatives.
Regarding the Federal Reserve's dual mandates of employment and inflation, the "Beige Book" shows that over half of the regions reported employment growth as "slight or moderate," with many areas experiencing limited layoffs and low levels of labor mobility. Inflation levels continued to remain moderate, with prices in most regions also showing similar "slight or moderate" increases, and several regions mentioned a slowdown in wage growth.
In the Atlanta Fed district, which includes areas most severely affected by Hurricane Ian, the report stated that the storm led to a decline in tourism and caused "significant losses and destruction" for farmers in parts of southern Georgia and Florida.
The "Beige Book" mentioned about 15 times the uncertainty surrounding the November U.S. elections, considering the elections as one of the factors leading consumers and businesses to postpone investment, hiring, and purchasing decisions.
Analysis suggests that the "Beige Book" report indicates that despite the unexpected rise in official employment, consumer prices, and retail sales data in September, the U.S. economy continues to slow down. Despite the recent improvement in economic data, Federal Reserve officials have recently cited anecdotes from some contacts about economic conditions as a reason to continue lowering interest rates.
The New York Fed compiled the latest version of the "Beige Book," using information collected before October 11. The report includes anecdotes and comments on the economic conditions from businesses and other contacts in the 12 Federal Reserve districts.
Here are the key points from the contacts in the 12 Federal Reserve districts:
Boston: "Retail and hospitality industries in the Cape Cod area were boosted by recruitment during the summer due to the resumption of short-term visas for foreign workers and an increase in the supply of domestic seasonal workers."
New York: "Sales in the restaurant industry declined due to fewer visitors. However, attendance at Broadway shows has improved, with recent attendance rates just slightly below pre-pandemic levels."
Philadelphia: "Contacts noted that the growth in demand for loans in most industries remains weak, with clients most often citing the postponement of investment plans due to expectations of further interest rate declines and the upcoming elections."Cleveland: "Most contacts across various industries report that they have not adjusted their selling prices in recent weeks, with customers remaining resistant to additional price increases."
Richmond: "Despite many firms reporting improved candidate quality and moderate wage growth, some companies continue to struggle to find workers of specific types. To attract these hard-to-find workers, firms have increased wage hikes and sought external assistance."
Chicago: "Contacts note that customers across income groups are trading down. For instance, lower- and middle-income consumers are opting for cheaper meal deals at fast-food restaurants instead of more expensive options, while higher-income consumers are choosing more affordable furniture and appliances."
Atlanta: "Automotive dealers report increased inventory and waning demand, exceeding the normal seasonal decline. They also note that luxury vehicle sales have slowed, although not as severely as other types, with these buyers increasingly pushing for lower prices."
St. Louis: "Several contacts in the hospitality industry report demand is higher than a year ago and has met expectations in most cases. However, spending on licensed merchandise at their venues is lower, with visitors seemingly more sensitive to price increases for goods than for activities."
Minneapolis: "Firms with job openings report a significant improvement in labor supply. A source at a Minnesota supply company, who received 12 applications for previously hard-to-fill high-skill driving positions, exclaimed: 'Unbelievable.'"
Kansas City: "Many firms reporting business expansion attribute growth to promotions, discounts, or special offers. Meanwhile, many firms reporting a decline in consumer spending emphasize that it is primarily a reduction in spending on high-end goods and services."
Dallas: "Contacts mention an increase in requests for senior assistance, attributed to inflation. A non-profit organization reports a rise in vacancies at housing facilities designated for seniors, as some have re-entered the workforce due to financial needs, causing them to lose eligibility for this low-cost housing."
San Francisco: "Consumers continue to seek discounts and are cautious about paying full price for non-essential items. Several reports indicate reduced household spending in the Pacific Northwest, affected by recent and ongoing labor disputes."