Fed Beige Book: Sluggish Growth in Most Districts, Mild to Moderate Jobs and Inflation Growth

On Wednesday, the Federal Reserve indicated in its newly released Beige Book report that economic activity in most districts of the United States has remained largely stable since early September.

The report shows that in more than half of the Federal Reserve's 12 districts, employment was reported to have "slightly or moderately" increased, and most districts indicated that price increases were "slightly or moderately" high. Most districts also noted a slowdown in wage growth.

The report states: "Overall, since early September, economic activity has changed little in almost all districts, with two districts reporting modest growth. Reports on consumer spending were mixed, with some districts noting changes in the structure of consumer purchases, mainly shifting towards cheaper alternatives."

The report indicates that despite unexpected increases in official statistics for employment, consumer prices, and retail sales in September, the U.S. economy continues to slow down. Although the latest data have improved, Federal Reserve officials recently cited anecdotes about the economic conditions of some contacts as a reason to continue lowering interest rates.

Bloomberg economist Eliza Winger said in a report after the release: "The Federal Reserve's latest Beige Book once again presents a weaker picture of the U.S. economy than the hard data. We believe that the latest assessment of the slowdown in economic growth may alleviate market concerns that the Federal Reserve may have to pause interest rate cuts."

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According to the report, in the Atlanta Federal Reserve district, including areas hardest hit by Hurricane "Helen," the storm led to a decline in tourism and caused "significant damage and losses" to farmers in parts of southern Georgia and Florida.

The New York Federal Reserve compiled this latest version of the Beige Book using information collected before October 11. The report includes anecdotes and comments on economic conditions from businesses and other contacts in the Federal Reserve's 12 districts.

Here are the key points of the report from each district:

Boston: "Retail and hospitality industries in the Cape Cod area were boosted by the resumption of short-term visas for foreign workers and an increase in the supply of domestic seasonal workers during the summer."

New York: "Sales in the catering industry have declined with fewer visitors. Nevertheless, attendance at Broadway performances has improved, with recent attendance slightly below pre-pandemic levels."Philadelphia: "Contacts noted that loan demand growth in most industries remains lukewarm, with the most common reason cited by customers being expectations of further interest rate declines and the upcoming election, which serve as reasons to defer investment plans."

Cleveland: "Across industries, most contacts reported that they have not adjusted their selling prices in recent weeks, and contacts continue to report that customers are unwilling to accept additional price increases."

Richmond: "Despite many businesses reporting improved candidate quality and moderate wage growth, some businesses still face challenges in finding specific types of workers. To attract those hard-to-find workers, businesses have more aggressively increased wages and sought external help."

Chicago: "Contacts noted that customers across all income brackets are 'trading down.' For example, low- and middle-income consumers are opting for cheaper value meals at fast-food restaurants instead of more expensive options, while high-income consumers are choosing more affordable furniture and appliances."

Atlanta: "Automotive dealers noted an increase in inventory and weaker demand than the normal seasonal decline, and noted that luxury car sales have not slowed as much as other models, but these buyers are increasingly pushing for lower prices."

St. Louis: "Several hotel industry contacts noted that demand is higher than a year ago and has generally met expectations. However, franchised consumer spending at their venues is lower, and tourists seem to be more sensitive to higher prices relative to the cost of their activities."

Minneapolis: "Businesses with job openings reported a significant improvement in labor supply. A source at a Minnesota supply company said the company received 12 applications for a high-skilled driving position that had been difficult to fill, noting, 'It's unbelievable.'"

Kansas City: "Many businesses reporting increased activity attributed this growth to promotions, sales, or discounts. Meanwhile, many businesses reporting a decline in consumer spending emphasized the contraction of luxury or high-end goods and services."

Dallas: "Contacts mentioned a steady increase in requests for assistance from the elderly, which they attribute to inflation. A non-profit organization reported a rising vacancy rate in their senior-specific housing facilities due to the elderly re-entering the workforce out of economic necessity, causing them to lose eligibility for this low-cost housing."

San Francisco: "Consumers continue to seek discounts and are unwilling to pay full price for non-essential items. Some reports highlighted reduced spending by families in the Pacific Northwest affected by recent and ongoing labor disputes in the area."