Fed’s Beige Book: US Economy “Increased Slightly” Since Late May

The US economy has only “increased slightly” since late May, compared with an evaluation of a “relatively unchanged” pace in the previous release on May 31, according to the Federal Reserve’s Beige Book report, a review of economic conditions. 

Across the country, conditions were uneven, with five districts reporting minor or modest increases, five reporting no change, and two reporting slight or modest declines. 

There was some growth in consumer services spending, a shift from discretionary spending, and unchanged or moderate growth in auto sales. Manufacturing activity was also split, with gains in only half the districts. 

Banking conditions were “subdued,” with fewer loans made. Despite rising mortgage rates, demand for real estate remained steady, but low supplies stifled sales. 

Employment increased “modestly”, with most districts reporting some job strength. Labor was still in high demand, but hiring was becoming more selective. Hiring difficulties were still observed in the health care, transportation and hospitality sectors, as well as for highly trained roles. 

Wages were up moderately but are returning to pre-pandemic levels. 

Prices rose marginally, with several regions reporting a decreased rate of increase. Some contacts expressed a reluctance to raise prices, while others claimed being able to do so due to strong demand. For the next few months, price increases were expected to be constant or reduced. 

The Beige Book summary was prepared at the Federal Reserve Bank of Minneapolis based on information collected on or before June 30, before the most recent employment and inflation data were released.