Here’s What Fed’s Latest Beige Book Report Shows for Economic Activity Across U.S.

WASHINGTON–Economic activity in the U.S. continued to expand from early April to mid-May, but conditions varied across industries and Federal Reserve districts, according to the newest Beige Book report from the Fed.

Beige Book

The Findings

According to the Beige Book:

  • “Most Districts reported slight or modest growth, while two noted no change in activity.
  • Retail spending was flat to up slightly, reflecting lower discretionary spending and heightened price sensitivity among consumers.
  • Auto sales were roughly flat, with a few Districts noting that manufacturers were offering incentives to spur sales.
  • Travel and tourism strengthened across much of the country, boosted by increased leisure and business travel, but hospitality contacts were mixed in their outlooks for the summer season.
  • Demand for nonfinancial services rose.
  • Activity in transportation services was mixed, as port and rail activity increased whereas reports of trucking and freight demand varied.
  • Nonprofits and community organizations cited continued solid demand for their services, and manufacturing activity was widely characterized as flat to up, though two Districts cited declines.

Tightened Standards

“Tight credit standards and high interest rates continued to constrain lending growth,” the Fed said. “Housing demand rose modestly, and single-family construction increased, though there were reports of rising rates impacting sales activity. Conditions in the commercial real estate sector softened amid supply concerns, tight credit conditions, and elevated borrowing costs. Energy activity was largely stable, whereas agricultural reports were mixed, as drought conditions eased in some Districts, but farm finances/incomes remained a concern. Overall outlooks grew somewhat more pessimistic amid reports of rising uncertainty and greater downside risks.”

Labor Markets

The Fed reported that employment rose at a slight pace overall. According to the Beige Book, eight districts reported negligible to modest job gains, while the remaining four Districts reported no changes in employment. A majority of Districts noted better labor availability, though some shortages remained in select industries or areas.

“Multiple Districts said employee turnover has decreased, and one noted that employers' bargaining power has increased,” the report states. “Hiring plans were mixed—a couple of Districts expect a continuation of modest job gains, while others noted a pullback in hiring expectations amid weaker business demand and reluctance due to the uncertain economic environment. Wage growth remained mostly moderate, though some Districts reported more modest increases. Several Districts reported that wage growth was at pre-pandemic historical averages or was normalizing toward those rates.”