Livro Bege

For use at 2:00 PM EDT
Wednesday
September 6, 2023
The Beige Book

Summary of Commentary on Current Economic Conditions
By Federal Reserve District
August 2023
Federal Reserve Districts
Minneapolis Boston
New York
Chicago Cleveland
San Francisco Philadelphia
Kansas City St. Louis

Richmond
Atlanta
Dallas
Alaska and Hawaii The System serves commonwealths and territories as follows: the New York Bank serves the
are part of the Commonwealth of Puerto Rico and the U.S. Virgin Islands; the San Francisco Bank serves
American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands.
San Francisco District.
This report was prepared at the Federal Reserve Bank of Kansas City based on information
collected on or before August 28, 2023. This document summarizes comments received from
contacts outside the Federal Reserve System and is not a commentary on the views of Federal
Reserve oﬃcials.
National Summary 1 What is the Beige Book?
The Beige Book is a Federal Reserve System publication about current
economic conditions across the 12 Federal Reserve Districts. It charac-
Boston A-1 terizes regional economic conditions and prospects based on a variety
First District of mostly qualitative information, gathered directly from each District’s
sources. Reports are published eight times per year.
New York B-1 What is the purpose of the Beige Book?
Second District The Beige Book is intended to characterize the change in economic
conditions since the last report. Outreach for the Beige Book is one of
Philadelphia C-1 many ways the Federal Reserve System engages with businesses and
Third District other organizations about economic developments in their communi-
ties. Because this information is collected from a wide range of con-
tacts through a variety of formal and informal methods, the Beige Book
Cleveland D-1 can complement other forms of regional information gathering. The
Fourth District Beige Book is not a commentary on the views of Federal Reserve
officials.
Richmond E-1 How is the information collected?
Fifth District Each Federal Reserve Bank gathers information on current economic
conditions in its District through reports from Bank and Branch direc-
Atlanta F-1 tors, plus interviews and online questionnaires completed by business-
Sixth District es, community organizations, economists, market experts, and other
sources. Contacts are not selected at random; rather, Banks strive to
curate a diverse set of sources that can provide accurate and objective
Chicago G-1 information about a broad range of economic activities. The Beige
Seventh District Book serves as a regular summary of this information for the public.
St. Louis H-1 How is the information used?

The information from contacts supplements the data and analysis used
Eighth District
by Federal Reserve economists and staff to assess economic condi-
tions in the Federal Reserve Districts. The qualitative nature of the
Minneapolis I-1 Beige Book creates an opportunity to characterize dynamics and identi-
Ninth District fy emerging trends in the economy that may not be readily apparent in
the available economic data. This information enables comparison of
economic conditions in different parts of the country, which can be
Kansas City J-1
helpful for assessing the outlook for the national economy.
Tenth District
The Beige Book does not have the type of information I’m looking
Dallas K-1 for. What other information is available?
Eleventh District The Federal Reserve System conducts a wide array of recurring sur-
veys of businesses, households, and community organizations. A list of
statistical releases compiled by the Federal Reserve Board is available
San Francisco L-1 here, links to each of the Federal Reserve Banks are available here,
Twelfth District and a summary of the System’s community outreach is available here.
In addition, Fed Listens events have been held around the country to
hear about how monetary policy affects peoples’ daily lives and liveli-
hoods. The System also relies on a variety of advisory councils—
whose members are drawn from a wide array of businesses, non-profit
organizations, and community groups—to hear diverse perspectives on
the economy in carrying out its responsibilities.
National Summary
The Beige Book ■ August 2023
Overall Economic Activity

Contacts from most Districts indicated economic growth was modest during July and August. Consumer spending on
tourism was stronger than expected, surging during what most contacts considered the last stage of pent-up demand
for leisure travel from the pandemic era. But other retail spending continued to slow, especially on non-essential items.
Some Districts highlighted reports suggesting consumers may have exhausted their savings and are relying more on
borrowing to support spending. New auto sales did expand in many Districts, but contacts noted this had more to do
with better availability of inventory rather than increased consumer demand. Manufacturing contacts in several Districts
also noted that supply chain delays improved, and that they were better able to meet existing orders. New orders were
stable or declined in most Districts, and backlogs shortened as demand for manufactured goods waned. One sector
where supply did not become more available was single-family housing. Nearly all Districts reported the inventory of
homes for sale remained constrained. Accordingly, new construction activity picked up for single-family housing. But
multiple Districts noted that construction of affordable housing units was increasingly challenged by higher financing
costs and rising insurance premiums. Bankers from different Districts had mixed experiences with growth in loan de-
mand. Most indicated that consumer loan balances rose, and some Districts reported higher delinquencies on consum-
er credit lines. Agriculture conditions were somewhat mixed, but reports of drought and higher input costs were wide-
spread. Energy activity was mostly unchanged during the final months of the summer.
Labor Markets
Job growth was subdued across the nation. Though hiring slowed, most Districts indicated imbalances persisted in the
labor market as the availability of skilled workers and the number of applicants remained constrained. Worker retention
improved in several Districts, but only in certain sectors such as manufacturing and transportation. Many contacts
suggested “the second half of the year will be different” when describing wage growth. Growth in labor cost pressures
was elevated in most Districts, often exceeding expectations during the first half of the year. But nearly all Districts
indicated businesses renewed their previously unfulfilled expectations that wage growth will slow broadly in the near
term.
Prices
Most Districts reported price growth slowed overall, decelerating faster in manufacturing and consumer-goods sectors.
However, contacts in several Districts highlighted sharp increases in property insurance costs during the past few
months. Contacts in several Districts indicated input price growth slowed less than selling prices, as businesses strug-
gled to pass along cost pressures. As a result, profit margins reportedly fell in several Districts.
Highlights by Federal Reserve District

Boston New York
Business activity expanded modestly on balance. New Regional economic activity held steady through the
car inventories normalized further but used cars re- summer. Labor market conditions generally remained
mained scarce. Home sales fell further, resulting in a solid, with steady wage growth. Consumer spending
disappointing spring and summer season. Concerning grew steadily, while manufacturing activity declined.
the outlook, fewer contacts mentioned a recession as a Home sales remained constrained due to low inventory
looming risk and pricing pressures were expected to and rising mortgage rates. Inflationary pressures picked
ease further. up slightly after easing much of the past year.
1
National Summary
Philadelphia St. Louis

Business activity continued to decline slightly during the Economic conditions have remained unchanged since
current Beige Book period. Although manufacturers our previous report. Employers reported continued tight
indicated an uptick in August, consumer spending de- labor markets and easing wage growth. Businesses
clined overall as did nonmanufacturing activity. Labor struggled to pass on price increases and reported contin-
availability improved further, and employment edged up uing increases in price sensitivity and weaker demand
once more. Wage growth and inflation continued to for high-end goods.
subside. Sentiment was somewhat divided, but expecta-
tions generally grew more positive. Minneapolis
Regional economic activity crept up on balance. Employ-
Cleveland ment grew slightly, with hiring activity remaining healthy.
Economic activity was generally flat in the Fourth District, Wage pressures were flat, while job seekers prioritized
though conditions shifted notably in some industries. work-life balance. Prices increased moderately; firms
While consumer spending and demand for manufactured were finding it harder to pass on higher costs. Consumer
goods softened, freight activity stabilized, and nonresi- spending rose and auto sales benefited from improved
dential construction activity increased. Contacts ex- inventory. Manufacturing and real estate activity fell;
pected similar economic conditions to persist in the near farm conditions weakened.
term.
Kansas City
Richmond Economic activity across the District was stable over the
The regional economy grew slightly in recent weeks. last two months. Manufacturing production and sales at
Consumer spending on retail and food service, as well service businesses improved due to a greater ability to
as on travel and tourism, picked up modestly. Manufac- meet existing orders, as delays along supply chains
turers noted a decrease in demand. Transportation were resolved. Job growth remained flat, but wage
volumes remained steady across freight modes. Resi- growth continued to exceed historical norms and busi-
dential real estate was constrained by limited inventory. nesses’ expectations. Contacts renewed expectations
Commercial real estate activity and lending declined. for slower wage growth ahead. Prices grew at a
Employment increased moderately and price growth moderate pace.
eased slightly.
Dallas
Atlanta Modest expansion continued, though activity was mixed
Economic activity grew modestly. Labor markets im- across sectors. Solid growth was seen in the nonfinan-
proved, and wage pressures eased. Nonlabor costs cial services sector, while retail sales were flat and
moderated, on net. Retail sales were robust. New auto activi-ty in the manufacturing, energy, and financial
sales were strong. Domestic leisure travel slowed, while services sectors declined. Employment growth picked up
international and business travel rose. Housing demand slightly overall, and wage growth remained high. Price
was durable. Transportation activity slowed. Energy pressures remained elevated in the service sector.
demand was strong. Agricultural conditions were mixed. Outlooks were fairly stable, though uncertainty persists.
Chicago San Francisco

Economic activity increased slightly. Employment in- Economic activity strengthened slightly. Labor availability
creased moderately; business and consumer spending improved and wage pressures softened further. Price
increased slightly; construction and real estate was flat; increases persisted, albeit at a slower pace. Retail sales
nonbusiness contacts saw little change in activity; and rose slightly, on balance, and manufacturing activity was
manufacturing decreased slightly. Prices and wages stable. Lending activity moderated in recent weeks.
rose moderately, while financial conditions tightened Local communities observed increased demand for
moderately. Expectations for farm incomes in 2023 were support services, particularly in areas impacted by wild-
little changed. fires and other severe weather in Hawaii and California.
2
Federal Reserve Bank of Boston
Summary of Economic Activity

Business activity expanded modestly on balance, as real estate markets continued to lag other sectors of the First Dis-
trict’s economy. Employment was about flat, wages grew at a modest pace, and price increases were generally small.
Consumer spending on retail goods and hospitality services increased moderately. Manufacturers gave mixed results,
but revenues increased at a moderate pace on average. Home sales fell further on rising mortgage rates. Nonetheless,
home prices continued to climb at an above-average pace from a year earlier owing to sharp inventory declines for the
same period. Commercial real estate activity was limited but stable. Contacts across all sectors expected relatively
stable activity moving forward, with further easing of pricing pressures, and fewer of them mentioned the possibility of a
recession when considering the outlook.
Labor Markets Prices

In First District labor markets, employment was roughly Prices increased only slightly on average. Contacts
flat, and wages grew at a modest pace. Labor supply largely reported that pricing pressures moderated fur-
increased at least slightly for a diverse range of positions ther, and in some cases prices decreased outright. At
and many contacts said that it had become easier to fill Boston-area hotels, average daily room rates stabilized,
job vacancies. Labor demand was described as steady rising only slightly from one year ago following several
but relatively modest in comparison with a year earlier, months of robust price growth. Retail sticker prices were
and contacts reported only selective layoffs. Reduced flat but effectively down slightly because of increased
attrition also contributed to a more stable employment promotions. Wholesale food prices for restaurants fell
environment. A restaurant industry contact said that modestly, the first decline in several years, and menu
existing workers took on more shifts and more new prices were flat. Discounts on new automobiles returned
workers were available, developments which were at- as inventories approached normal levels, but prices on
tributed to the looming return of student loan repay- used vehicles remained elevated. Manufacturing con-
ments. Contacts in multiple industries noted that entice- tacts, with one exception, reported stable or decreasing
ments such as flexible arrangements and sign-on bonus- prices, and transportation costs in particular were low-
es had become less common. Wage increases were er. However, one manufacturer continued to post high
modest on average, but some employers said that the single-digit price increases in order to offset increases in
pace of wage growth remained above pre-pandemic labor and nonlabor expenses. Contacts were sanguine
norms, while a contact in the healthcare sector said that that inflationary pressures would continue to ease mov-
starting wage levels were down sharply from their pan- ing forward.
demic peaks. A workforce development contact de-
scribed sustained success placing workers with physical Retail and Tourism
or developmental disabilities, and expressed confidence Among First District contacts, retail and restaurant sales
that placing workers from non-traditional backgrounds increased moderately in recent months. An online retail-
would remain possible moving forward, even with some er experienced an uptick in sales volume partially at-
uptick in unemployment. Moving forward, contacts most- tributed to offering discounts on more products. A dis-
ly expected current labor market trends to continue, with count retailer saw further modest improvements in sales
some further softening of demand possible but no major volumes, pointing to an improved inventory. A repre-
disruptions. sentative for automotive dealerships reported steady
A-1
Federal Reserve Bank of Boston
sales and improved inventories of new cars but said that mand for medical office space, however. In the industrial
inventories of used cars remained depressed. A Massa- market, leasing activity slowed further on softer demand
chusetts restaurant industry contact reported an above- and very low vacancy rates, although some large new
average seasonal sales uptick for July, particularly on spaces were set to come online in Rhode Island. In the
Cape Cod and in Boston’s Seaport. Nonetheless, August retail market, contacts said that grocery-anchored subur-
brought somewhat softer restaurant sales, especially in ban shopping centers enjoyed decent leasing activity
suburban areas. Occupancy rates rose modestly for that outperformed expectations. Otherwise, the retail
Boston area hotels in recent months, but average daily market was mixed, with flat or rising vacancy rates.
room rates levelled off. Retail and tourism contacts alike Across markets, high borrowing costs continued to limit
had a stable outlook, cautiously optimistic for sustained investment sales, impeding price discovery. Contacts
modest growth for their own businesses in the near-term. anticipated that sales volume would remain low through
at least the end of 2023. Multiple contacts expected a
Manufacturing and Related Services modest uptick in office leasing in the fall, mostly due to
Manufacturing revenues increased moderately on aver- seasonal trends but also due to stricter return-to-office
age, but about half of firms reported either flat or some- policies. The industrial market was expected to weaken
what softer sales. Those with disappointing results in- further moving into late 2023.
cluded a testing equipment manufacturer that endured
weaker-than-expected demand from China and a semi- Residential Real Estate
conductor manufacturer that was vulnerable to de- Throughout the First District, considerably fewer single-
creased PC and smartphone sales. In contrast, a veteri- family homes and condos were sold in July 2023 than
nary products maker experienced strong revenue growth were sold at the same time last year. A Massachusetts
in line with expectations, and a maker of leather goods contact said that the state’s closed sales fell abruptly in
reported very strong revenue growth led by online July from the previous month, owing to further increases
sales. Employment was stable among our contacts. One in mortgage rates, as Boston experienced its weakest
contact reported a major upward revision in capital ex- July for single-family sales since 2010. Prices increased
penditure plans, buoyed by several years of strong at a solid pace from July 2022, generally rising by be-
sales. The outlook was roughly stable or slightly im- tween 5 and 10 percent. These trends were accompa-
proved, with most contacts at least cautiously optimistic nied by a substantial year-over-year drop in inventory
about their firms’ near-term prospects. However, some across New England, with the sole exception of Maine,
contacts cited further weakness in demand from China which bucked the trend and saw growth in the number of
as a significant downside risk. single-family homes and condos on the market. Multiple
contacts pointed to high mortgage rates as a cause of
Staffing Services these inventory constraints, mentioning that many home-
First District staffing firms reported modest revenue owners are hesitant to sell houses whose mortgages
gains on balance in the third quarter, although some said they obtained under more favorable conditions. One
that revenues had fallen slightly below normal levels Massachusetts contact suggested that state legislation
recently. Contacts noted slight increases in labor supply eliminating barriers to construction may help to alleviate
and modest but steady demand for most roles. Only inventory challenges going forward but cautioned that
selective layoffs were reported. Staffing contacts enjoyed any effects would likely not appear before next year.■
increased revenues from temporary placements, driven
by elevated pay rates for such roles, which had largely
evaporated during the pandemic. While most job candi-
dates still preferred permanent, direct-hire positions,
temporary roles offering higher wages were nonetheless
seen as a reasonable alternative. The outlook was quite
mixed and uncertain, with about flat performance ex-
pected on balance for the rest of 2023.
Commercial Real Estate

The commercial real estate market of the First District
was described as mostly stagnant in recent months. In
the office market, few leases were signed, rents were For more information about District economic conditions visit:
flat, and vacancy ticked up slightly from fresh sublease www.bostonfed.org/regional‐economy
offerings. Multiple contacts reported strengthening de-
A-2
Federal Reserve Bank of New York

Economic activity in the Second District held steady in the latest reporting period. While contacts noted some slowing in
hiring, labor market conditions generally remained solid, with ongoing modest employment gains and steady wage
growth. Inflationary pressures increased slightly after easing much of the past year. Supply availability continued to
improve, though manufacturing activity contracted. Consumer spending grew steadily, led by spending on experiences,
while spending on goods sagged. Tourism activity in New York City continued to grow through late summer, inching
back toward pre-pandemic levels. Exceptionally low inventory continued to restrain home sales. Commercial real estate
markets were mostly unchanged, with some further weakening in the office sector. Conditions in the broad finance
sector stabilized following a period of pronounced weakness, though, on balance, loan demand continued to decline
and delinquency rates edged up. Looking ahead, businesses have become somewhat more optimistic about the eco-
nomic outlook.

Labor market conditions generally remained solid, though Inflationary pressures increased slightly after easing for
contacts noted some slowing in hiring. Overall, employ- much of the past year. Both service firms and manufac-
ment continued to increase modestly, with stronger gains turers reported that input price increases picked up a bit
seen among wholesalers, personal service firms, and in recent weeks. One contact noted substantial increas-
businesses in education & health, while hiring remained es in insurance costs. Selling prices have increased at a
weak among manufacturers. Contacts generally reported steady pace for both service firms and manufacturers,
ongoing low attrition rates as workers remained nervous though contacts at retail businesses reported that selling
about switching jobs in the current economic environ- prices had flattened and expect little change in the
ment. months ahead. Contacts noted that consumers have
become more price-conscious, and now price is often
While remote work has remained prevalent in the re-
the most important factor in purchasing decisions.
gion’s service sector, several contacts reported that post-
pandemic return-to-office requirements are increasingly a Consumer Spending
source of friction in hiring and job negotiations. Still, Consumer spending increased steadily in the latest
employers offering remote work noted improved ease of reporting period. Spending on travel, entertainment, and
hiring and worker retention. restaurants & bars has continued to rise since the last
Business contacts generally reported ongoing steady report, though department store contacts noted goods
wage growth, though a large payroll firm in upstate New sales have sagged, particularly for seasonal apparel.
York indicated that the pace of growth has moderated Auto dealers in upstate New York reported that new car
somewhat as labor market conditions have become more sales edged up slightly as more inventory became avail-
normalized and worker shortages have eased. Still, the able. With solid lingering pent-up demand, new inventory
supply of workers remains a challenge in the region, has been turned over quickly. Even so, some auto man-
especially for the leisure & hospitality sector. On net, ufacturers have continued to use targeted incentives—
businesses in most sectors plan to increase employment subsidized financing in particular—to boost sales of
in the coming months. certain models. Used car sales increased in recent
weeks spurred by softening prices.
B-1
Federal Reserve Bank of New York
Manufacturing and Distribution leaves little choice for potential sellers, making low inven-
Manufacturing activity contracted during the latest report- tory self-reinforcing.
ing period. Supply availability continued to improve,
Residential rental markets continued to tighten. In New
delivery times held steady, and inventories declined.
York City, rents climbed to new highs, though a decline in
Businesses in transportation & warehousing also report-
new lease activity during the high season suggests some
ed declining activity, while wholesalers reported that
slowing ahead, even amid historically low vacancy rates.
activity increased slightly. Manufacturing and distribution
Rents also continued to rise in upstate New York.
firms have become notably more optimistic about the
economic outlook. Commercial real estate markets were mostly unchanged.
The office market deteriorated slightly, with modest in-
Services creases in vacancy rates and declines in rents. New York
Service sector activity has been mixed. Businesses in City’s retail market was little changed in the last reporting
the information, education & health, and leisure & hospi- period, with steady vacancy rates, rents, and leasing activi-
tality sectors reported increasing activity, while contacts ty. While the industrial market generally remained firm,
in the business services and personal services sectors rents declined and vacancies climbed in northern New
saw activity decline. Looking ahead, service firms were Jersey.
fairly optimistic that conditions would improve in the
coming months. Overall, construction contacts reported that conditions
stabilized over the summer. Office construction in New
Tourism activity in New York City continued to grow York City continued to slow, but office construction in
slowly through late summer, inching back toward pre- upstate New York and northern New Jersey remained at a
pandemic levels. While the number of travelers is nearly moderate pace. Industrial construction activity was strong
back to normal, tourists are substituting lower-cost expe- and steady. Much of the District saw increased multi-family
riences for premium ones — such as partaking in casual residential construction starts, but in upstate New York
dining instead of fine dining or staying at reduced-service activity was minimal, with no construction starts and a
hotels. Meanwhile, some hotels and restaurants are slight decline in units under construction.
making do with fewer workers by reducing service levels
and business hours. Looking ahead, China’s recent Banking and Finance
decision to remove pandemic-era restrictions on group Conditions in the broad finance sector stabilized following
travel to the United States is expected to boost tourism a period of pronounced weakness. Small to medium-sized
in New York City. banks in the District reported lower loan demand in all loan
categories. Bankers were split on the changes in loan
Real Estate and Construction interest spreads over the past two months, with as many
Exceptionally low inventory has continued to restrain reporting widening spreads as reporting narrowing
home sales activity across the District, pushing up prices spreads. On balance, banks reported tighter credit stand-
and frustrating potential buyers. With few properties to ards, higher deposits, and rising delinquency rates.
choose from, bidding wars remained prevalent in upstate
New York and in the suburbs around New York City. By Community Perspectives
contrast, inventory hovered near historic norms in Man- Community contacts reported that rising numbers of asy-
hattan, leaving buyers less pressured. Still, home prices lum seekers were increasing the need for the provision of
were steady to up slightly, and affordability was at a long social services and education across the District. Pres-
-time low. Contacts noted some concern that the re- sures were particularly pronounced on New York City’s
sumption of student loan payments in October will make emergency shelter system. The number of individuals
it even more difficult for some to afford purchasing a seeking shelter in New York City has nearly doubled in a
home. year due to growing numbers of migrant families. The
logistics and budget implications of providing migrants
The recent rise in mortgage rates has also pushed some
housing, social, and education services have been chal-
potential buyers to the sidelines. Real estate contacts
lenging for policymakers and community organizations in
reported that homeowners with low mortgage rates do
the District. ■
not want to move, and the resulting lack of inventory
For more information about District economic conditions visit:

https://www.newyorkfed.org/regional-economy
B-2
Federal Reserve Bank of Philadelphia

On balance, business activity in the Third District continued to decline slightly. Consumer spending was down in most
sectors, including retail, restaurants, autos, and tourism. High interest rates continued to constrain the available invento-
ry of new homes and have also excluded many low-asset consumers from purchasing homes or cars. Employment
edged up as labor availability continued to improve. Wage growth and inflation continued to subside – both continued to
grow within a modest range. Overall, contacts reported far fewer supply chain disruptions and a lower (steadier) cost of
goods for their inputs. Contacts continued to note tighter credit standards. Credit quality remains very good, despite a
slight rise in delinquencies. On balance, firms continued to expect slight growth over the next six months – weaker than
the norm for an expansionary period. Sentiment is divided. A few contacts stated that their sectors were in a recession.
However, most expressed that there were no signs of a recession, and many were more optimistic for a soft landing.
Labor Markets skill workers, especially among smaller firms, but that
Employment appeared to edge up after falling slightly unusually high salary demands from professional work-
during the prior period. Staffing firms and other contacts ers had waned.
reported an improving labor market, with more job candi- On a quarterly basis, firms’ expectations of the one-year-
dates, better retention, and fewer callouts for sick time, ahead change in compensation cost per worker fell to a
but many also noted a lower quality of applicants. trimmed mean of 4.3 percent in the third quarter of 2023,
Contacts noted few layoffs but less job loyalty. Although from 4.6 percent in the second quarter (and from a peak
turnover has improved, it remains high during a worker’s of 5.8 percent in the third quarter of 2022). Expectations
first year. Several contacts noted burnout of tenured averaged 3.2 percent prior to the pandemic. Expected
employees, especially in health care, and also observed compensation growth fell to 4.4 percent for manufactur-
that an emphasis on return-to-office strategies signifi- ers and to 4.1 percent for nonmanufacturers.
cantly impacts working single mothers.
Prices
In our monthly surveys, employment grew slightly as the On balance, inflation subsided further in the third quarter –
share of nonmanufacturing firms that reported increases continuing in the more modest range that began in the
in full-time and part-time jobs rose. This was offset, in second quarter. Moreover, reports of price increases were
part, by a rising share of manufacturing firms reporting a below historical trends for manufacturers’ inputs and for
decline in overall jobs. nonmanufacturers’ outputs. Expectations of future price
Firms reported that wage inflation remained at a modest hikes edged lower.
pace overall – near pre-pandemic levels – and continued Contacts reported that increases in prices received for
to slowly subside. Moreover, firms expected worker their own goods and services over the past year edged
compensation increases to subside further in 2024. lower in the third quarter of 2023 compared with the sec-
In our monthly surveys, the distribution of nonmanufac- ond quarter. The trimmed mean for reported price chang-
turing firms reporting higher or lower wage and benefit es, as indicated by responses to our quarterly survey
costs per employee remained typical of the pre- questions, fell to 4.5 percent from 4.6 percent for all firms.
pandemic era, when modest wage growth prevailed. Price increases remained at 3.7 percent among nonmanu-
Contacts noted some ongoing wage pressure from low- facturers and fell to 5.3 percent from 5.8 percent for man-
C-1
Federal Reserve Bank of Philadelphia
ufacturers. Reported price increases had peaked during Nonfinancial Services

2022 at 5.8 percent for nonmanufacturers and at 10.4 On balance, nonmanufacturing activity declined slightly –
percent for manufacturers. after a more modest decline in the prior period. Contacts
In our monthly surveys, the diffusion indexes remain noted fewer concerns of a recession – invoking a soft
somewhat elevated for prices paid by nonmanufacturers landing instead. The index for expected growth over the
and for prices received by manufacturers compared with next six months has risen since the prior period – nearly
their nonrecession averages. However, for prices paid by to its nonrecession level, although it slipped a little in
manufacturers and for prices received by nonmanufactur- August.
ers from consumers and other buyers, the indexes are
Financial Services
below their nonrecession averages.
The volume of bank lending (excluding credit cards)
Looking ahead one year, the increases that firms antici- resumed growing moderately during the period (not
pated in the prices for their own goods fell further – the seasonally adjusted) – after slowing to a modest pace
trimmed mean for all firms fell to 3.7 percent in the third last period. Loan growth was also modest during the
quarter of 2023. It has fallen from a peak of 5.9 percent in comparable period in 2022.
the fourth quarter of 2021. The expected rate of growth
During the period, District banks reported strong growth
edged up to 4.1 percent for nonmanufacturers but fell to
in home mortgages and auto loans, modest growth in
3.3 percent for manufacturers.
other consumer loans, and slight growth in commercial
Manufacturing real estate lending and commercial and industrial loans.
Manufacturing activity turned positive in the latter half of The volume of home equity loans fell slightly. Credit card
the period – generating slight growth overall after a year volumes rose moderately following a stronger surge last
of declines. The August indexes for general activity and period. The pace was also slower than the comparable
for new orders were just above their nonrecession aver- period last year.
ages. The sudden uptick in the indexes was primarily Banking contacts and large service companies continued
driven by fewer firms reporting decreased demand rather to report good credit quality – noting only small upticks in
than by more firms reporting increased demand. loan delinquencies, which remain at very low levels.
Most contacts noted ongoing improvements in the supply Market participants noted that higher interest rates and
chain, with a return to normal for many. Despite the up- tighter credit standards had sidelined many deals and
tick, sentiment weakened, as expressed by one contact, were especially challenging for small businesses.
who said, “The chatter is things are slowing down; we
Real Estate and Construction
are just not seeing or experiencing [a recession].” Large
Existing home sales resumed a slight downward trajecto-
firms with extensive linkages to the broader economy
ry – well below the prior-year level. Brokers noted that
also noted steady activity and no signs of a recession.
high interest rates are now constraining the demand for
Consumer Spending existing homes largely to high-asset buyers. However,
Consumer spending continued to decline slightly. Con- that demand remains greater than the still-shrinking
tacts noted that consumers were purchasing fewer items inventory – driving prices higher and low-asset buyers
and were trading down by shopping for lower-priced into rental units. New home builders reported a steady
goods and at discount stores. A fast-casual restaurateur flow of contract signings as well-heeled buyers sought
reported a slowdown and noted “consumer fatigue from alternatives to the sparse existing home market.
price increases.” However, this behavior was described Market participants in commercial real estate reported a
as a “slight belt tightening,” not as a recession. slight uptick in construction activity. While the demand
Auto dealers reported a slight decline overall, although for new office and warehouse space has largely evapo-
sales held steady for some. While inventories continued rated, ongoing bids for institutional, multifamily residen-
to improve, interest rates and high prices have excluded tial, and public infrastructure projects have extended the
some buyers. Several contacts noted that sales of some pipeline of new projects and sparked a “shred of opti-
electric vehicle models had softened. mism.” The office market contracted modestly as leases
rolled over into spaces with smaller footprints. ■
Tourism contacts reported a slight decline overall – led
by falling demand from high levels of activity at many
Third District leisure destinations, in part because more
travelers are going abroad again. The recovery at urban For more information about District economic conditions visit:
destinations leveled off. www.philadelphiafed.org/regional-economy
C-2
Federal Reserve Bank of Cleveland

On the surface, business activity in the Fourth District was little changed from that of the prior reporting period, though
there were some notable shifts in industry conditions. Consumer spending softened in recent weeks after firming during
the previous three periods. Similarly, demand for manufactured goods decreased slightly, a situation which many con-
tacts attributed to continued inventory correction. Meanwhile, freight activity appeared to stabilize, though it remained
weak. Nonresidential construction activity increased, and contacts reported that clients were moving ahead with new
and previously postponed projects. Looking forward, contacts generally expected little change in overall business activi-
ty in the near term. On balance, contact reports suggested that employment increased slightly. Many firms reported that
hiring was easier and turnover had declined. Upward pressures on wages, nonlabor input costs, and prices were rela-
tively unchanged from those of the previous reporting period, but, in each case, these have eased considerably from
those of the prior year.
Labor Markets of costs. Per one construction contact, “nobody’s raising

On balance, Fourth District employment increased prices, nobody is decreasing [them].” Some manufactur-
slightly, though contact reports varied more than in the ers stated that costs for many materials, such as resins,
recent past. On one hand, some manufacturing, con- were flat, while costs for other materials, such as steel
struction, and freight contacts increased staffing levels in and lumber, had declined. Looking forward, contacts
key areas to reduce backlogs, handle new projects, or expected that nonlabor input cost pressures would con-
meet higher-than-expected demand. On the other, some tinue to ease.
manufacturing and financial services contacts reported General price pressures were largely unchanged from
increased layoffs and cited tight margins and declining those in the prior reporting period. However, compared
demand. Moreover, several firms that were trying to to the number of contacts early in the year, a narrower
reduce staffing through attrition said that lower turnover set of contacts was willing (or able) to push through price
prevented them from doing so; thus, they were forced to increases. Many contacts reported increased price sen-
lay off workers. Several contacts noted that hiring had sitivity among their clients, and some freight contacts
become less difficult. Contacts generally expected em- reported increasing some price concessions to remain
ployment to continue increasing slightly in the near term. competitive. One freight hauler said, “Even our best
Wage pressures have eased since the start of the year, customers are regularly seeking rate concessions.” That
though they changed little from those in the prior period. said, several manufacturing and construction contacts
Firms across industries more frequently reported transi- raised prices to cover increased costs.
tioning from previous unscheduled cost-of-living increas-
Consumer Spending
es to regular annual wage increases. One tourism con-
Consumer spending softened somewhat in recent
tact said there would be “no across the board increases
weeks. Goods spending remained weak amid high inter-
like last year” because he was able to be selective when
est rate's dampening sales of big-ticket items and elevat-
increasing pay.
ed price's constraining discretionary spending. Auto
Prices dealers said that sales slowed because of higher interest
Similar to wage pressures, nonlabor input cost pres- rates and that inventories had increased. Moreover,
sures changed little from those in the prior period, some said that the pent-up demand built during pandem-
though they have eased since the start of the year. On ic-era supply shortages had been mostly exhausted. A
balance, contacts across industries noted a “leveling off” large general merchandiser noted that discretionary
D-1
Federal Reserve Bank of Cleveland
goods spending was down as customers continued to balances or sought higher-yield alternatives. In the
spend more on food and other essentials. By contrast, months ahead, lenders expected loan demand to remain
apparel retailers reported steady or strong sales, and flat and higher interest rates to discourage borrowing.
one noted that back-to-school sales had increased from
those of the prior year. Services spending moderated Nonfinancial Services
compared to that in recent reporting periods, with, for Freight activity remained tepid this reporting period.
example, restauranteur's reporting generally flat sales. Haulers reported that weaker demand for consumer
Looking ahead, contacts expected demand to change goods and firms’ desire to draw down inventories con-
little in coming months. tributed to ongoing weakness in the sector. However,
contacts indicated that conditions stabilized somewhat
Manufacturing compared to those in previous reporting periods and
Demand for manufactured goods decreased slightly. were optimistic that volumes would increase in the com-
Some contacts reported that new orders had declined as ing months ahead of the holiday season. Overall, profes-
pandemic-era supply shortages subsided and customers sional and business service contacts reported that de-
no longer needed to keep excess inventory. By contrast, mand increased recently. In the months ahead, contacts
steel manufacturers generally reported steady or in- anticipated that demand would be relatively flat as clients
creased orders following an expected seasonal slow- curtailed spending in the face of economic uncertainty.
down spanning the first half of July. One manufacturer
tied to light vehicles noted stronger orders because of Community Conditions
increased vehicle production by auto manufacturers. On Nonprofits noted increased demand for their services.
balance, manufacturers expected customer demand to For example, one entity providing mental health and
remain soft in the coming months. addiction treatment services received 50 applications for
just two openings in the program, with wait times as long
Real Estate and Construction as nine months. Several nonprofits said that hiring and
New home sales remained strong, though one contact retaining staff had been particularly challenging, and one
suggested that construction was slowing because large community service provider reported that it was 40
“interest rates have finally taken their toll” and discour- workers shy of its desired staffing level of 170. Contacts
aged developers from investing to create buildable lots. cited three primary reasons for the hiring challenges.
This contact indicated that slower construction would First, pay rates among nonprofit entities were not com-
exacerbate an ongoing severe shortage of inventory on petitive with those in the for-profit world. Second, limited
the existing side, something which had been constrain- childcare and transportation options were more likely to
ing sales for several quarters. In the coming months, adversely affect workers in the nonprofit sector. Third,
contacts generally expected demand to decline in the funders often earmarked dollars for the provision of
face of elevated interest rates and higher home prices. services without earmarking accompanying funding for
overhead. For example, donations to food banks were
Nonresidential construction activity increased somewhat.
often reserved for the purchase of food, but not for the
Multiple general contractors reported new projects,
overhead associated with getting the food to those in
stronger backlogs, or past clients’ decisions to proceed
need. One contact noted that what was needed were
with previously postponed plans. Demand for office
unrestricted funds to cover operational costs, including
space remained weak, but one contact noted that the
those for staffing. ■
return of more workers to the office boosted the firm’s
commercial leasing activity. Nonresidential construction
and real estate contacts expected activity to be stable in
the months ahead.
Financial Services
Bankers indicated that higher interest rates and econom-
ic uncertainty continued to dampen loan demand from
households and businesses. One lender reported that
many firms were opting to “wait and see” before moving
forward with projects. Overall delinquency rates re-
mained near historically low levels, despite some bank-
er's reporting slight increases in delinquencies. Core For more information about District economic conditions visit:
deposits declined slightly as customers spent down their www.clevelandfed.org/en/region/regional-analysis
D-2
Federal Reserve Bank of Richmond

The Fifth District economy grew slightly in recent weeks. Retailers and food service contacts reported steady to modest
growth in sales, despite lower foot traffic. Auto sales were solid this period, but other consumer durables saw declines.
Travel and tourism rose modestly as summer vacations were in full swing. Nonfinancial services firms noted stable
demand, even with price increases caused by higher costs. District ports remarked that imports slowed as retailers and
manufacturers still had elevated inventory levels. Loaded exports, particularly agriculture products, remained strong.
Fifth District manufacturers reported a slowdown this period. Trucking firms reported steady, but low, levels of freight
volumes this cycle. Residential real estate respondents stated that the limited inventory of homes for sale has put up-
ward pressure on sales prices. Commercial real estate markets slowed this period; however, leasing remained strong
for retail and industrial properties with rents continuing to escalate. In contrast, office and multifamily rents were starting
to soften. Loan demand was stable this period despite shrinking deposit levels at banks. Employment increased mod-
estly but at a slower pace than in previous reports. Many contacts indicated that the labor market remains extremely
tight but wage growth eased slightly. Price growth continued to ease but remained elevated compared to pre-pandemic
levels.
Labor Markets Manufacturing

Employment in the Fifth District increased modestly over Fifth District manufacturing slowed somewhat in the
the most recent reporting period but at a slower pace most recent reporting period. A steel coater stated that
than in previous reports. Some contacts stated that the the economy is in a “caution zone” and their customers
labor market remained tight and were doing what they are only ordering products they know they can sell quick-
can do to find employees. A recruiting agency’s clients ly. A fabrics manufacturer reported that their business is
are bypassing temp-to-hire workers and just bringing volatile due to the fact that their customers do not have
them on full-time. A bearings manufacturer reported that the confidence to hold much inventory. Finding workers
their skilled tradesmen were approaching retirement, so remained a significant issue, and firms are finding ways
the company was trying to revitalize their apprenticeship to minimize costs associated with hiring. A coffee manu-
program to train young adults out of high school and facturer cited that they cannot pass costs on to custom-
community colleges. An office furniture installation com- ers anymore and will invest in technology throughout the
pany reported that when people do show-up for inter- production process to rely less on labor.
views, their wage demands were too high to match their
skill set. Ports and Transportation
Fifth District ports stated that loaded import volume was
Prices down but back to pre-pandemic levels. Imports were
Price growth eased somewhat in recent weeks but re- lower year-over-year but flat month over month; the
mained elevated. According to our most recent surveys, decline in import volume was mainly due to a decrease
growth in prices received by manufacturers declined to in consumer goods. Exports were slowly ticking up,
an annual rate of just over three percent. Service sector primarily for agricultural products, wood pulp, resins, and
price growth also eased slightly but remained more vehicles. Spot shipping rates decreased and were slight-
elevated at a five percent growth rate. A plumbing supply ly lower than 2019. Carriers had reduced shipping ca-
company said material costs had fallen and they were pacity in order to maintain price. Gate turn times im-
passing along those savings by lowering their prices. proved and container dwell times returned to normal
Several service providers noted that wage pressures levels. Demand for airfreight stabilized after declining
eased as the availability of labor improved somewhat, over the last 18 months and air cargo rates dropped
which helped to slow the increases in labor costs.
E-1
Federal Reserve Bank of Richmond
precipitously, but both are still above pre-pandemic remained strong for retail and industrial properties with
levels. rents continuing to escalate. In the office market, compa-
nies were looking to decrease rental cost by downsizing
Trucking firms reported that with the decrease in the
and relocating to smaller footprints in higher quality
number of carriers, there have been incremental oppor-
buildings. Rental rates in the office segment remained
tunities to pick up freight. Demand was steady this peri-
flat; however, landlords were offering more incentives
od as there was no sizable decrease in freight volumes.
and/or concessions to potential tenants. In the multifami-
Spot rates increased slightly, particularly with third party,
ly sector, rents were starting to soften partially caused by
transactional freight. However, respondents indicated
a new supply of multifamily units coming onto the mar-
that they were able to get moderate increases with their
ket. Respondents stated that some banks have pulled
contract rates despite customers being very price sensi-
back on new commercial real estate lending activity and
tive. Trucking companies indicated that drivers were
that, coupled with higher interest rates, has made deals
more readily available but that job openings for mechan-
less attractive, and in some cases, not viable.
ics and shop staff were still difficult to fill. Firms also
stated that they were experiencing higher costs of labor, Banking and Finance
parts and new equipment. Loan demand was unchanged in recent weeks and has
returned to pre-Covid levels. This stable demand has
Retail, Travel, and Tourism
been noted across all loan portfolios, consumer and
Consumer spending grew at a modest rate in recent
commercial. One observation was loans were being
weeks. Retail and food service contacts reported steady
originated for only what must be done and no more.
to modest growth in sales despite some declines in foot
Home equity loans and lines saw an increase in de-
traffic as warm weather and summer travel led to fewer
mand, with respondents noting borrowers were not keen
customers coming through the doors. In contrast, a
to refinance lower rate first mortgages for their needs.
couple of furniture stores saw sales decline as a result
Deposit levels continued to shrink, and competition for
of the softness in real estate markets. Auto sales re-
balances was still strong. Credit quality continued to be a
mained solid this period.
concern as the cost to borrow increased while delinquen-
Travel and tourism rose moderately as summer travel cy rates remained stable at low levels.
was in full swing. Coastal areas of North and South
Carolina saw strong visitation with increased room Nonfinancial Services
nights sold and high levels of occupancy. Average room Nonfinancial service providers continued to report that
rates were down slightly compared to last year but reve- demand for their services as well as revenues had re-
nue was still up, overall, because of the strong growth in mained stable. One respondent observed that demand
room nights sold. An airport reported strong passenger continued, even with price increases due to higher costs.
traffic and increased seat capacity but fewer flights as Some noted that clients were finding themselves con-
larger aircraft were being utilized. strained due to the increasing lack of access to capital,
keeping their growth muted. Labor shortages continued
Real Estate and Construction to ease, but wage pressures continued to be present in
Residential real estate respondents indicated that the the marketplace. An overall sense of economic uncer-
limited inventory of homes for sale has boosted competi- tainty was noted with many of the respondents, driving
tion among buyers and has put upward pressure on much of the decision making at their firms as well as
sales prices. Sellers who secured low mortgage rates their clients. ■
have been hesitant to sell, leaving a dearth of new list-
ings leading to a decrease in closed sales. Overall,
home sales were constrained by both affordability and
by the lack of inventory. In the last month, buyer traffic
was lower due to the usual seasonal slowdown. Days on
market increased slightly, mostly related to stale inven-
tory. Prospective buyers were not having any difficulties
obtaining mortgages. Home builders indicated that
construction costs leveled off but remain high relative to
pre-pandemic levels.
Overall market activity in the Fifth District commercial For more information about District economic conditions visit:
real estate sector slowed this period. However, leasing www.richmondfed.org/research/data_analysis
E-2
Federal Reserve Bank of Atlanta

The economy of the Sixth District grew at a modest pace from July through mid-August. Labor availability and retention
improved, and wage pressures eased. Nonlabor input costs moderated further, and pricing power diminished some-
what. Retail sales were strong. New auto sales were robust; the sale of used vehicles slowed. Domestic leisure travel
slowed while business and international travel improved. Housing demand was healthy, existing home inventories re-
mained low, but new home inventory increased. Commercial real estate conditions were mixed. Transportation activity
softened. Loan growth was solid except for consumer loans, and delinquencies remained low. Energy demand was
strong amid high summer temperatures. Agriculture demand was unchanged.
Labor Markets firms were holding prices steady. The Atlanta Fed’s
Most contacts continued to report improvements in labor Business Inflation Expectations survey showed year-
availability and retention; however, some firms slowed over-year unit cost growth was little changed at 3.3
the pace of hiring or reduced headcount. Despite im- percent, on average, in August, from 3.2 percent in July.
provements, labor availability remained a top priority for Firms' year-ahead inflation expectations decreased in
employers. Some expected skill shortages to persist and August to 2.5 percent, on average, from 2.8 percent in
were investing in technology and automation to reduce July.  
reliance on a shrinking workforce. Employers in south
Community Perspectives
Florida and along the Gulf Coast reported that the cost of
Contacts serving low-income communities described
living, particularly housing, restricted the supply of work-
economic conditions as largely unchanged to slightly
ers. Employers noted a growing preference among declining. Capital and credit deployment to small busi-
workers for fewer work hours and greater flexibility. nesses slowed due to rising borrowing costs and tighter
Reactions to a new Florida immigration law were mixed; underwriting standards. Lenders and investors expect an
several noted no impact to business, while others said increase in small business capital availability with the roll
workers were leaving the state. out of federal programs like the State Small Business
Wage growth remained elevated as compared with pre- Credit Initiative. On the consumer side, several finance
pandemic levels, but most firms noted that wage pres- and credit contacts noted that delinquency rates for
sure had eased, and many anticipate further moderation automobile loans and some credit card accounts rose
slightly, and elevated auto delinquencies among lower-
next year. Some contacts said that lower-wage workers
income populations are anticipated going forward. Con-
continued to be attracted away for higher pay, better
tacts also noted that demand for food and housing assis-
working conditions, and greater scheduling flexibility.
tance remained higher than pre-pandemic levels.
Prices
Contacts described nonlabor input costs as continuing to
Consumer Spending and Tourism
District retailers reported that consumer spending was
stabilize, though they were still higher than 2019 levels.
robust, largely attributed to the strength in employment.
Notable exceptions included rising construction input
Contacts continued to describe spending shifts away
costs (like concrete and electrical equipment), which
from discretionary items, though demand for high-end
were in contrast to price deflation in some food products
luxury products remained strong. Automobile dealers
(like eggs and corn). Property and liability insurance
reported that rising inventory levels and demand for new
costs in coastal areas remained a top concern regarding
vehicles drove robust sales; the pace of growth for used
housing affordability and firms’ investment plans. Pricing
vehicle sales slowed.
power was largely reported as eroding, though most
F-1
Federal Reserve Bank of Atlanta
Tourism contacts reported that demand for leisure travel slowing earnings growth. Despite changes in interest
slowed, which was considered a normalization of activity rates, financial institutions reported stability in their secu-
and aligned with expectations following pandemic-driven, rities portfolios with unrealized losses still elevated com-
pent-up demand. International, group, and business pared with pre-pandemic levels.
travel continued to improve but were not back to 2019 Energy
levels. Advanced bookings for the Fall were meeting Demand for and supply of energy were described as
expectations. normalizing, and contacts noted ample reserves to han-
dle increased demand resulting from high summer tem-
Construction and Real Estate peratures. Investment in renewables drove additional
The housing market throughout the District remained
capacity for utilities companies. Contacts reported robust
healthy despite higher mortgage rates. Although the
activity in plant expansions for oil and gas refineries,
pace of sales was below that of a year ago, home prices
chemical manufacturers, and low carbon and green
continued to rise in most markets. Supply shortages in
energy projects. Related to increased energy production,
the resale market persisted, as homeowners with low-
contacts described strong demand for onshoring large-
rate mortgages were reluctant to sell. The share of new
scale modular plant construction since some chemical,
home inventory increased as builders ramped up con-
petrochemical, and liquefied natural gas customers were
struction to meet demand. Builder contacts indicated an
“burned” by offshoring these builds over the last several
increased reliance on rate buydowns as an incentive to
years, which resulted in late delivery and poor-quality
attract buyers. Builder optimism fell, however, as rising
structures.
interest rates and construction costs put strains on af-
fordability and buyers’ ability to qualify. Agriculture
Commercial real estate conditions slowed. Activity decel- Agricultural conditions were little changed since the
erated for high-end multifamily units and industrial real previous report. Demand for cattle was strong. Egg
estate. More contacts reported growing concerns about supply increased, but the supply of hens remained lower
financing, as lenders heightened underwriting standards than normal. The supply of chickens continued to exceed
and reduced funding commitments. Contacts reported demand, although there was some improvement in the
challenges with the availability of financing for office market. There continued to be excess supply of milk in
space, and transaction volume continued to deteriorate. the market. Many row crops were expected to have a
Participants noted growing uncertainty amid declining strong harvest. Demand for cotton remained weak, lead-
asset values. ing some growers to exit the cotton market.■
Transportation
Demand for transportation services varied by industry
segment, but was on average, depressed. Trucking firms
reported a continued slump in freight volumes, and e-
commerce activity slowed. International air freight re-
mained sluggish amid a global supply chain recovery
and geopolitical issues that strained trade flows. Ocean
carriers reported strong exports to the Middle East and
Asia from the U.S., but trade with Europe softened.
Imports from China fell. Ports experienced mixed de-
mand. Railroads noted fewer shipments of consumer
goods, resulting from the rightsizing of inventories and
mixed consumer spending, but they saw strong activity
in energy, automotive, equipment, and metals.
Banking and Finance

District financial institutions reported sustained solid loan
growth across most portfolios, with the notable exception
of auto and other consumer loans. Most institutions have
yet to report significant increases in delinquencies. Fi-
nancial institutions continued to fund loan growth using
large time deposits and other borrowings as they faced
increased competition for core deposits. The rising cost
of funds put more pressure on net interest margins,
www.atlantafed.org/economy-matters/regional-economics
F-2
Federal Reserve Bank of Chicago

Economic activity in the Seventh District increased slightly overall in July and early August. Contacts generally expected
a small decline in demand over the next year and many expressed concerns about the potential for a recession in the
U.S. Employment increased moderately; business and consumer spending increased slightly; construction and real
estate was flat; nonbusiness contacts saw little change in activity; and manufacturing decreased slightly. Prices and
wages rose moderately, while financial conditions tightened moderately. Expectations for farm incomes in 2023 were
little changed.
Labor Markets Multiple retail contacts noted that back-to-school shop-

Employment rose moderately in July and early August ping got off to a strong start. Sales of nondurable goods
and contacts expected a similar rate of increase over the were largely up, with contacts highlighting increases at
next 12 months. Many contacts continued to have diffi- grocery stores, gas stations, and convenience stores. In
culty finding workers, particularly those with higher skills. contrast, reports on sales of durable goods were mixed.
However, many also said hiring had become easier, and Retailers expressed a considerable amount of uncertain-
a staffing agency noted a decline in worker turnover. ty over the upcoming holiday season, and contacts said
Manufacturers were responding to slowing demand by orders for the second half of this year were conservative.
using fewer temporary workers and cutting workers’ Leisure and hospitality spending softened slightly but
hours. Wage and benefit costs rose moderately, though remained at elevated levels; declines in air travel and
several contacts noted a slowdown in the pace of wage hotels more than offset higher spending at tourist attrac-
increases. tions and amusement parks. New and used light vehicle
sales rose, helped by greater availability of more afforda-
Prices ble models.
Prices rose moderately over the reporting period and
contacts expected a similar rate of increase over the Business Spending
next 12 months. Nonlabor costs were up modestly, with Business spending increased slightly in July and early
a number of contacts highlighting rising energy costs. August. Capital expenditures were up a bit, with several
Contacts noted slower growth in prices for some raw contacts reporting purchases of new equipment or soft-
materials and price decreases for others. Shipping costs ware, or expansions of existing facilities. Demand for
were little changed, remaining much lower than a year industrial, commercial, and residential energy grew
ago. Consumer prices increased moderately due to solid slightly. Inventories for most retailers were a little higher
demand and the passthrough of higher costs. than desired. Auto inventories were little changed and at
a low level. In manufacturing, inventories were slightly
Consumer Spending elevated amidst slow demand.
Consumer spending increased slightly overall in July and
early August. Nonauto retail sales increased modestly.
G-1
Federal Reserve Bank of Chicago
Construction and Real Estate contacts noting an increase in credit card debt and one
Construction and real estate activity was little changed reporting that delinquencies for auto and card debt had
on balance over the reporting period. Residential con- risen back to pre-covid levels. Consumer loan rates were
struction increased slightly overall, and contacts noted moderately higher and lending standards tightened
that low levels of existing home inventory were making moderately.
new homes more attractive. However, some contacts
Agriculture
saw a slowdown in multifamily construction. Residential
District farm income expectations for 2023 remained
real estate activity decreased slightly as low inventories
much lower than 2022 levels. However, reduced costs
held back sales. Contacts indicated that homes were
for some inputs, particularly fertilizers, boosted net in-
selling quickly, and many received multiple offers. A
come prospects for 2024. Drought concerns lessened
banking contact said that borrowers they had pre-
overall, although hot weather toward the end of the
qualified for mortgages were often switching to new
period impaired development of a wide swath of Midwest
construction after getting frustrated searching for an
crops. Corn, soybean, and wheat prices were down. Still,
existing home. Home prices and rents were up slightly.
there were reports of a slowdown in exports as prices
Nonresidential construction was little changed. Some
offered by other producers were more favorable on world
contacts noted a pullback in leading indicators of future
markets. Hog prices moved down after hitting a seasonal
activity such as environmental studies, land surveys, and
peak. Prices for dairy products rose from low levels, and
financing for speculative development. In contrast, con-
egg prices crept up a bit. Cattle prices increased once
tacts noted progress on a large number of state and
again, remaining one of the few agricultural prices above
local construction projects. Commercial real estate activi-
the levels of a year ago. Farmland prices were still high-
ty was unchanged. Commercial prices fell slightly and
er than a year ago.
rents were down modestly in some sectors, most notably
office. Contacts said many investors were holding off Community Conditions
making commercial real estate purchases because they Community, nonprofit, and small business support con-
expected prices to fall further. Vacancy rates were un- tacts reported little change in economic activity from a
changed. robust level. State government officials saw slowing
growth in tax revenues and a small increase in demand
Manufacturing for unemployment insurance. Some small business
Manufacturing demand decreased slightly in July and
lenders noted a slowdown in loan demand, which they
early August. Supply chain conditions continued to im-
attributed to economic uncertainty. Nonprofit contacts
prove, though some contacts reported difficulty acquiring
continued to experience challenges with wage competi-
specialty items like industrial electrical components.
tion from private sector employers, as well as an in-
Steel orders decreased modestly, in part due to weaker
crease in other operational costs. Nonprofit organiza-
demand from the oil and gas and the machinery indus-
tions also said high demand for services was straining
tries. Fabricated metals orders remained flat. Machinery
efforts to respond to elevated levels of food insecurity. ■
sales decreased slightly, with contacts highlighting less
demand from the auto industry. In contrast, auto industry
contacts reported increased auto production despite
supply chain disruptions at some plants. Several con-
tacts expressed concerns about the potential for a UAW
strike to put a hold on a large share of U.S. auto produc-
tion. Heavy truck orders decreased slightly amidst mod-
erately low inventories.
Banking and Finance

Financial conditions tightened moderately over the re-
porting period. Bond and equity market asset values
decreased slightly, and volatility edged up. Business
loan demand decreased modestly over the reporting
period, while loan quality remained flat. Business loan
rates increased a bit and standards tightened moderate-
ly. Consumer loan demand also decreased modestly.
Consumer loan quality deteriorated some, with multiple
chicagofed.org/cfsec
G-2
Federal Reserve Bank of St. Louis

Economic conditions have remained unchanged since our previous report. Employers reported continued tight labor
markets and easing wage pressures. Consumer demand softened slightly. Firms reported continuing increases in con-
sumer sensitivity to sales prices and weaker demand for high-end goods or those that require financing. Banking con-
tacts reported solid credit quality but decreasing loan demand and a continued steady rise in delinquency rates. Home
sales dropped slightly, but contacts reported healthy demand and low inventory. Residential construction was mixed, but
industrial and commercial construction saw growth.
Labor Markets although credit card transaction costs increased, they

Employment has remained unchanged since our previ- have not raised prices in order to stay competitive. More
ous report. Labor markets remained tight, and industries broadly, a regional survey reported that two-thirds of
report mixed abilities to attract and retain talent. Con- consumers delayed or did not buy a purchase because
tacts in tourism and food service continued to report of higher prices. Some industry contacts reported steady
struggles filling lower-level job vacancies. A manufactur- overall demand, with consumers making substitutions for
ing contact in Louisville reported having fewer applicants cheaper items. Others, such as a tourism contact from
while requiring higher employment levels due to rising Northwest Arkansas, saw no immediate effect on de-
demand. However, in Little Rock, a banking contact mand after increasing prices.
noted success in retaining more top talent by fast track-
Consumer Spending
ing them to better positions.
District general retailers, auto dealers, and hospitality
Wages grew moderately since our previous report. On contacts reported mixed business activity and a slightly
net, most contacts reported increasing wages over the negative outlook. July real sales tax collections in-
previous quarter. Manufacturing contacts in Memphis creased in Kentucky, Missouri, and Western Tennessee
reported wage inflation easing, and a hotel industry relative to the previous month and decreased in Arkan-
contact in Louisville noted employees’ requests for wage sas. Retailers in St. Louis noted consumers have been
increases have declined. watching their spending and switching to lower-quality
and less-expensive goods. A Louisville auto dealer re-
Prices ported both new and used high-end vehicles are seeing
Many businesses are aiming to maintain prices despite a slowdown in demand due to affordability issues. This
increasing input costs. The main reason for this is sof- has been most prominent with full-sized pickup trucks
tening demand and increased price sensitivity from and used vehicles over $25,000. District restaurant
consumers. A respondent from a niche import business contacts noted mixed business activity over the past few
reported that despite an increase in freight costs, they months, with inflationary pressures still impacting con-
could not fully raise prices because of falling sales. sumer spending at all restaurants. Little Rock hospitality
Another contact in the restaurant industry reported that contacts noted a rebound in corporate travel. They also
H-1
Federal Reserve Bank of St. Louis
reported that the strong demand for tourism is mainly shortages. Another contact reported that rising interest
driven by high-income visitors and a drop in low- and rates are stalling commercial real estate sales because
middle-income visitors. building values have declined at a rapid rate. Little Rock
contacts saw residential construction increase since the
previous report—in part a response to the tornado in
Manufacturing March. Meanwhile, contacts in western Tennessee re-
Manufacturing activity growth has decreased slightly ported a slowing pace of residential construction.
since our previous report. Firms in both Arkansas and
Missouri have reported slight decreases in new orders Banking and Finance
and production, but moderate increases in inventories. Banking conditions in the District have remained stable
Lingering supply-chain issues and elevated prices on raw since our previous report. Overall and credit card loan
inputs continue to be an ongoing issue for manufac- demand decreased slightly from the previous quarter,
turers, though they have continued to improve in recent while commercial, industrial, and mortgage loan demand
months. Firms are struggling to entice new workers, in all decreased moderately. Contacts across the District
part because of the increased availability of remote work reported tightening liquidity and profit margins due to the
in other industries. On average, firms reported they ongoing pressure to raise deposit rates. Delinquency
expect slight decreases in production, capacity utiliza- rates continued to climb to pre-pandemic levels and are
tion, and new orders in the coming quarter. being closely monitored by banking contacts. One con-
tact pointed to rising cost of living as a potential driver of
Nonfinancial Services the increase in consumer delinquencies. Overall, howev-
Reports of activity in the nonfinancial services sector er, banks continue to report solid credit standards and
since our previous report were mixed. Freight traffic quality, with little past-due loans, collections, foreclo-
increased slightly month-over-month but was slightly sures, or charge-offs.
depressed from last year, while passenger traffic has
been increasing slightly both month-over-month and year Agriculture and Natural Resources
-over-year. A Little Rock transportation contact reported District agricultural conditions have been mixed since our
high demand for air travel. A contact in the Memphis previous report. Despite record-breaking heat and heat-
transportation industry reported issues with shipping and dome-induced thunderstorms across the District, the
rising concerns about an upcoming recession due to percent of cotton and rice rated fair or better stayed
growing warehouse inventories. Overall, sales and sales stable throughout the reporting period, with cotton return-
expectations for services contacts were generally about ing to 2021 rating levels after a moderate dip in 2022.
the same or slightly lower across all regions. An educa- Corn and soybean ratings both decreased more signifi-
tion provider reported low school enrollment. A St. Louis cantly during the summer months, sustaining their fall
childcare provider reported that sales met expectations, below 2020-2021 levels the previous year. District con-
but higher costs contributed to a worsening outlook. A St. tacts described feeling the effects of extreme weather
Louis healthcare provider is planning to expand facili-ties and increased interest rates in the form of higher input
with a new medical office building. costs. On net, contacts indicated a slight decline in dollar
value sales and an increase in inventories. ■
Real Estate and Construction
Residential rental rates in the four main District MSAs
have remained unchanged since our previous report.
Arkansas and St. Louis contacts both reported high
demand for rental units, with multiple applications sub-
mitted in the first week on the market. Total existing
homes sold month-over-month dropped by 11% and 9%
in Little Rock and Memphis MSAs, respectively, during
July. Residential inventory in Little Rock, Louisville, and
Memphis remained relatively constant since our previous
report. Demand continues to be consistent since our
previous report.
Industrial and commercial construction have remained
strong since our previous report. One Louisville contact
reported turning down multiple projects because of labor
H-2
Federal Reserve Bank of Minneapolis

The Ninth District economy grew slightly since early July. Employment increased slightly and wage pressures were
unchanged. Prices increased moderately overall. Growth was noted in consumer spending, tourism, and residential
construction, while commercial construction was flat. Manufacturing as well as residential and commercial real estate
activity decreased, and agriculture weakened. Oil and gas drilling also fell slightly. Minority- and women-owned busi-
nesses reported mixed activity.

Employment grew slightly since the last report. Hiring Prices increased moderately overall since the previous
demand fell but remained at healthy levels. Most report. A third of firms responding to a monthly business
employers, even small ones, were hiring in some survey reported that the prices they charged to
capacity. But the share of employers looking to add full- customers increased in July from a month earlier, while
time workers dropped, and total job openings were 40 percent reported that their input prices increased.
moderately lower; very few firms reported that they were More than two-thirds of respondents to a recent survey
cutting workers. A South Dakota utilities company noted said that it had gotten harder to pass their increased
that it “was hiring positions deemed critical to day-to-day input costs on to customers since the beginning of the
business operations. All other discretionary positions are year. A regional manufacturing survey indicated nearly
on hold.” Labor supply was improving, but applicant flat wholesale prices in July from a month earlier. A third
quality was still poor, with some exceptions in higher-skill of hospitality survey respondents reported that their
areas. A Montana staffing contact noted that clients were prices charged to customers increased by 5 percent or
asking for fewer workers, in part because “they know we more over the past year; contacts in the industry
don’t have 10 [good] candidates. They are doing more reported significant continued pressure on food prices.
with less labor, and forgoing growth.” Larger employers Retail fuel prices in District states increased briskly since
reported having more success in adding workers, likely the last report. Prices received by farmers increased in
because they also reported stronger increases in June from a year earlier for barley, chickpeas, potatoes,
compensation. hay, and cattle; prices decreased from a year earlier for
Wage pressures were flat but ongoing wage growth corn, wheat, soybeans, milk, hogs, turkeys, chickens,
remained above average. A recent survey found that 60 eggs, dry edible beans, lentils, and canola.
percent of employers raised wages by 3 percent or more
Worker Experience
over the last 12 months, roughly in line with wage
Workers and job seekers continued to prioritize flexibility
increases reported in January. However, respondents
and work-life balance, according to several contacts. A
expected future wage growth to fall moderately. A
labor contact in the Upper Peninsula of Michigan shared
northern Minnesota workforce contact said, “Wage offers
that many police officers and nurses were choosing
have stabilized in the last three to six months. Many
predictable schedules over the highest wages available
have stopped additional wage increases as it does not
when changing jobs. “They prefer balance and flexibility
seem to be effective in getting and retaining employees.”
I-1
Federal Reserve Bank of Minneapolis
in their lives,” the contact said. According to a Minnesota industrial vacancy ticked higher but remained at healthy
contact, nearly half of clients at a coworking space chose levels. Residential real estate remained soft, with year-
to work there rather than at the company office or at over-year July sales falling in most markets, often by
home “because they prefer the flexibility and autonomy.” double digits. Several contacts said demand was higher
According to a Minnesota labor contact, financial than indicated by sales and attributed much of the
incentives offered by employers were having diminishing slowness to very low inventories of homes for sale.
effects as they tried to attract new workers.
Manufacturing
Consumer Spending District manufacturing activity decreased modestly since
Consumer spending was slightly higher overall since the the previous report. A regional manufacturing index
last report, with some variability. Retail contacts across indicated a contraction in activity in Minnesota, North
the District reported that recent sales were a bit slower Dakota, and South Dakota in July from a month earlier.
overall compared with the same period last year, and Manufacturers that responded to the monthly business
they expected the trend to continue over the coming conditions survey indicated increased orders in July from
quarter. Hotel bookings in Montana in July were higher the month prior and were expecting growing sales in the
than a year ago, but some tourism contacts there month ahead. An electrical equipment producer reported
suggested that the pandemic boom in outdoor tourism that new business slowed and it was uncertain about its
was slowing. Minnesota hospitality and tourism contacts outlook after working through existing backlogs, a
reported that recent sales were up slightly overall, and sentiment reported by multiple other contacts.
tourism traffic in Michigan’s Upper Peninsula has also
been strong compared with last summer. Passenger Agriculture, Energy, and Natural Resources
traffic at regional airports saw continued growth. New- District agricultural conditions weakened slightly. More
vehicle sales have risen thanks to increased vehicle than a third of respondents to a survey of agricultural
inventory. A dealership with multiple locations saw new- credit conditions reported that farm incomes decreased
vehicle sales in July rise by almost half compared with in the second quarter from a year earlier. Several
last year; used-vehicle sales have slowed somewhat as contacts noted that while commodity prices were still
a result. Recent recreational vehicle sales remained favorable, they were retreating to levels that could be
slower across the District compared with last year, but below break-even for some producers given high input
sales of powersport vehicles have rebounded. costs. Drought conditions improved recently but
remained a concern, especially in eastern portions of the
Construction and Real Estate region. District oil and gas drilling activity decreased
Construction activity was flat since the last report. slightly since the previous report; however, contacts
Construction contacts across the District reported mixed reported that oil production increased recently.
sales activity, with notable shares seeing either
increases or decreases compared with last summer. In Minority- and Women-Owned Business Enterprises
some cases, decreases stemmed from lack of labor. Activity among minority- and women-owned business
Industry data showed that the value of construction contacts was mixed. Equal shares of respondents to a
starts in the District in July was similar to the previous July survey of businesses reported that sales were
two years, without factoring in inflation. Among sub- higher, lower, or unchanged over the prior month.
sectors, office construction remained moribund, and Capital expenditures were slightly higher on balance,
multifamily construction was also experiencing softer and more often than not, respondents reported lower
activity. Firms serving infrastructure markets reported profits. More than a third of respondents shared that their
stronger activity, likely due to increased federal demand for workers had increased but hiring roadblocks
spending. Single-family residential construction saw continued. Retail and wholesale prices were flat for three
modest improvements in a few markets; Minneapolis-St. -quarters of firms and higher for the rest. A slightly higher
Paul saw a 10 percent increase in single-family permits share reported they raised wages. “[We] gave annual
in July year over year. Across the District, hiring raises of 4.5 percent to stay competitive … up from our
remained robust, supply chains improved, and prices for historic 3 percent,” shared a contact with a freight
materials were easing but still high. railroad transportation company in Minnesota. ■
Commercial real estate activity was lower. Multifamily

vacancy rates increased modestly in some markets
despite a slowdown in new construction. Office vacancy For more information about District economic conditions
rates have stabilized somewhat, but at high levels; visit: minneapolisfed.org/region-and-community
I-2
Federal Reserve Bank of Kansas City

Economic activity across the Tenth District was stable over the past two months. After falling from high rates of growth
during the first half of the year, manufacturing production and sales at service businesses stabilized in July and August.
Contacts indicated the recent pickup in growth was not due to increases in demand, so much as a greater ability to meet
existing orders as delays along supply chains were resolved. Accordingly, job growth was flat across the District. Despite
several months of subdued employment growth, wages continued to grow at a robust pace through August, exceeding
historical norms and most businesses’ expectations. Consumer spending continued to expand at a moderate pace, with
robust leisure travel offset somewhat by tepid retail sales growth. Several contacts suggested consumers have exhausted
their savings and are relying more on borrowing to support spending. Bankers noted pockets of deterioration in some
consumer loan types as delinquencies rose, with further deterioration expected for consumer borrowers. Prices increased
at a moderate pace in recent months, a noticeable reduction from the pace of price increases witnessed over the last
year. Though slower, growth in input prices still outpaced selling prices for most firms, compressing profit margins.

Most Tenth District contacts reported employment levels Prices increased at a moderate pace in recent months, a
were unchanged in recent months. Labor markets re- noticeable reduction from the pace of price increases
mained tight with many businesses reporting ongoing witnessed over the last year. Though slower, the pace of
difficulties hiring and retaining skilled workers, partially growth in input prices still outpaced selling prices for
contributing to the slowdown in hiring activity. Both ser- most firms, which contacts attributed more to elevated
vices and manufacturing businesses indicated modest wage growth rather than to rising materials prices. Both
improvements in expected employment growth over the manufacturing and service contacts reported compres-
next six months. These expectations were based on a sion in their profit margins in recent months, as busi-
better outlook for recruiting workers, rather than a desire nesses were unable to pass all their higher costs onto
to open more positions and recruit more workers. customers. Expectations are for continued margin com-
pression in the coming year, but at a slower pace than
Despite several months of subdued employment growth,
witnessed in recent months.
wages grew at a robust pace, exceeding historical
norms. Most contacts reported annual wage increases Consumer Spending
between 6 and 10 percent during the first half of the Consumer spending continued to expand at a moderate
year. However, these contacts also suggested the pace during the last couple months, driven largely by a
“second half of the year will be different,” renewing their stronger-than-expected summer tourist season. Contacts
expectations for softening of wage growth they reported across District states reported robust growth in leisure
in early 2023. Most contacts indicated they expect more travel at both drive-to and fly-to destinations. Despite
moderate wage increases of less than 5 percent over the healthy tourism activity, contacts reported growth in retail
next year. Manufacturing contacts, in particular, reported sales has not been as robust. In several states, retail
a stark shift in wage expectations, with over two thirds of spending declined slightly, with contacts suggesting
respondents downshifting their expectations to more consumers have exhausted their savings and are relying
modest wage increases. more on borrowing to support spending. New auto sales
increased a bit due to slightly more available inventory.
J-1
Federal Reserve Bank of Kansas City
Community Conditions Community and Regional Banking

Housing providers faced more difficulty building new, Loan demand weakened further during the last month as
and maintaining existing, affordable rental properties bankers stated high interest rates and economic uncer-
because of substantial increases in financing and insur- tainty resulted in a cautious approach for prospective
ance costs. In Colorado, property insurance premiums borrowers. Contacts noted pockets of deterioration in
reportedly rose as much as 30-50% over the last year, some consumer loan types as delinquencies rose, with
due in part to increased weather-related claims. Con- further deterioration expected for consumer borrowers
tacts reported some optimism in being able to help low- and across the commercial real estate (CRE) industry.
and moderate-income households with homeownership, Several contacts also stated that credit standards for
using state and philanthropic funds for down payment CRE loans had tightened in light of reduced risk appetite
assistance and rate buy downs. However, evictions and and expected deterioration in credit quality. Deposit
foreclosures continued to rise, and recently reached or levels stabilized during the last couple of months, while
exceeded 2019 levels across District states. A non-profit the funding mix continued to shift from checking ac-
in Kansas City noted calls for housing and utility assis- counts to time deposits, driving up overall bank funding
tance were up 21% and 12%, respectively, over the costs.
previous six months and up 30% from 2019 levels.
Energy
Manufacturing and Other Business Activity Tenth District energy activity remained steady through
After declining for several months, manufacturing pro- August. Though oil prices rose, total oil production and
duction and sales at service businesses stabilized in July rig counts in the District were essentially flat, as global oil
and August. Contacts indicated the recent pickup in consumption slightly underperformed a majority of Dis-
activity was not due to increases in demand. Instead, trict firms’ expectations. The number of active gas rigs
businesses reported a greater ability to meet existing decreased slightly, and production stagnated because
orders, as delays along supply chains were resolved. As drilling for gas remained unprofitable for District firms.
existing orders were met, businesses indicated that Well completions leveled off from recent declines, keep-
backlogs and inventory levels declined significantly over ing the number of drilled-but-uncompleted wells un-
the past two months. Contacts expressed mixed views changed. Accordingly, District energy employment ticked
on investments plans. Falling profit margins and shorter up only slightly, but still lagged pre-pandemic levels.
backlogs led many businesses to pull back on capital Coal production in Wyoming increased moderately as
expenditures. Some contacts also noted securing financ- regional prices remained above historic levels.
ing for equipment and transportation vehicles was more
difficult. Still, many businesses reported increasing in- Agriculture
The farm economy in the Tenth District remained strong,
vestment activity in recent months and had plans to raise
but conditions softened alongside lower agricultural
their investment spending over the next six months.
commodity prices and persistent drought. Volatility in
Real Estate and Construction markets for major crops was elevated amid heightened
Demand for housing continued to exceed available hous- uncertainty about supply and demand conditions.
ing supply across the District. Contacts noted several Through mid-August, prices for corn and wheat were
changes in the composition of home buyers in recent about 10% lower than the beginning of the month and
months. First, fewer institutional investors bought homes soybean prices also dropped slightly. In the livestock
recently. Investor-buyers were more likely to own a small sector, cattle prices remained strong and continued to
number of properties. Second, fewer buyers were willing support profit opportunities, despite considerable cost
to purchase homes that required significant improve- pressures. Large areas of the region continued to be
ments. Financing for home renovation typically requires heavily impacted by drought that could reduce crop
licensed contractors perform the work, rather than own- revenues and limit availability of feed for livestock opera-
ers’ “sweat equity.” The combination of skilled-labor tions. District contacts continued to highlight input costs,
shortages and higher financing costs reportedly deterred interest rates and thinner margins as other key concerns.
renovation activity on newly purchased homes. Third, Lenders indicated that credit conditions remained sound
investor-buyers were much more likely to ‘flip’ refur- with support from strong farm finances. ■
bished homes, rather than hold and rent them, due to
higher interest expenses.
www.KansasCityFed.org/research/regional-research
J-2
Federal Reserve Bank of Dallas

The Eleventh District economy continued to expand at a modest pace overall. Solid growth was seen in the nonfinancial
services sector, while retail sales were flat and activity in the manufacturing, energy, and financial services sectors
declined. Housing demand was mixed, and home price increases remained subdued. Scant rainfall and very high tem-
peratures depressed agricultural conditions in much of the district. Employment growth picked up slightly overall, and
wage growth remained high. Input cost and selling price pressures were elevated in the service sector but modest in
manufacturing. Outlooks were fairly stable, though uncertainty persists around the continuing impact from higher interest
rates.
Labor Markets has become more difficult over the past three months to
Employment growth picked up slightly over the reporting pass cost increases on to customers. The survey also
period. Manufacturing hiring resumed an average pace showed that Texas businesses expect input costs to
after slowing in June, and service sector firms added to increase 4.7 percent on average this year, down from
payrolls at a slightly elevated rate. Airlines reported a 9.6 percent increase in 2022. They expect to raise their
normalization after record hiring last year, and some selling prices 3.3 percent, down from 7.4 percent last
layoffs were reported in cargo transportation. Overall, year.
most Texas businesses said they were looking to hire,
Manufacturing
and while lack of applicants remained the top impedi-
Texas manufacturing activity continued to contract over
ment, applicant availability generally improved over the
the reporting period, with declines seen in new orders,
reporting period. However, reports of labor shortages
output, and capital spending. The weakness was broad-
continued in health care, trucking, oilfield services, auto
based but most notable in chemical, high-tech, and
repair and skilled trades.
machinery manufacturing. Food and fabricated metals
Wage pressures remained elevated, though there were manufacturing exhibited more strength than other seg-
some signs of moderation as the year progressed. Staff- ments. A chemical manufacturer said construction, pack-
ing services firms reported less pressure on wages over aging, and industrial demand were proving anemic, and
the past six weeks. that the weak outlook for China and Europe was weigh-
ing on expected export demand. Other contacts cited
Prices higher interest rates as a headwind for capital invest-
Price pressures remained subdued in manufacturing but ments and construction-related manufacturing. An Au-
still elevated in the service sector. Oilfield services firms gust Dallas Fed survey showed that thirty percent of
noted some input price softening as supply chains im- manufacturers saw a decrease in production as a result
proved. Fuel prices were up over the reporting period. of the recent heat wave, largely stemming from lower
Several contacts remarked that customers were more labor productivity and temperature-sensitive worksites.
price sensitive, and an August Dallas Fed survey of Overall, outlooks worsened, and contacts voiced con-
more than 300 Texas business executives showed that it cern over the current manufacturing slump.
K-1
Federal Reserve Bank of Dallas
Retail Sales most expecting a decrease in loan demand and a deteri-

Retail sales stabilized over the past six weeks after oration of general business activity over the next six
declining in the prior period. Auto dealers noted some months.
weakness in sales, and contacts pointed to inflation and
Energy
high interest rates denting consumer demand. Several
Drilling activity for oil and gas wells declined over the
also cited a potential auto workers strike as a threat.
past six weeks, particularly for smaller producers. The
Numerous retailers said sales have been impacted by
Eleventh District rig count fell moderately again, with
the excessive heat hurting demand, particularly stores
past increases in costs and declines in prices for crude
that rely on foot traffic. Outlooks stabilized somewhat,
oil and natural gas making some projects uneconomical.
though were still tilted toward the negative.
Well completions eased but continued to hold up better
Nonfinancial Services than drilling activity. Most contacts expect the rig count
Growth in service sector activity accelerated over the to stabilize soon, and some expressed receding reces-
reporting period. Revenue growth was led by profession- sion risks.
al and business services, where contacts noted im-
Agriculture
proved sentiment about economic conditions. Leisure
A significant portion of the district entered (or reentered)
and hospitality also experienced a pickup in August
drought over the past six weeks due to meager rainfall
despite several contacts noting a negative impact from
and soaring temperatures. Pasture conditions deteriorat-
the extreme heat. Airlines said demand stayed strong
ed, and the weather had an adverse effect on row crops.
over the summer, especially for leisure travel. Health
A majority of the Texas cotton crop was rated in poor to
care remained a weak spot. Overall, outlooks were fairly
very poor condition, and abandonment is expected to be
stable, with contacts expecting moderate growth over the
high this year. Cattle prices rose further over the report-
next six months.
ing period, driven by tight supply and solid demand for
Construction and Real Estate beef.
Housing demand remained solid for new homes due to Community Perspectives
incentives such as rate buydowns that help lower mort- The scarcity of affordable housing remained the most
gage rates. In contrast, existing home sales declined due pressing issue for lower-income individuals, according to
to high mortgage rates and low inventories of homes community nonprofits. High rent and costly utilities were
available for sale. Home price increases remained sub- pricing residents out of their current living situation.
dued. Construction for new homes increased, while Contacts lamented that high construction costs pose a
multifamily construction trended down. A wave of new major challenge for affordable housing developers build-
apartment units has caused rents to fall and vacancy ing more stock. One nonprofit serving senior adults said
rates to increase. inflation coupled with a reduction in SNAP benefits has
The office market continues to face sluggish rents and put food insecurity as the top threat to seniors, which is a
high vacancy rates. The outlook is brighter for new Class change from the usual top threats of isolation and diffi-
A office buildings than older office buildings and other culty accessing healthcare. ■
categories which face a more uncertain future. The retail
market is doing well, though it is expected to slow as
consumer spending weakens. The industrial market
remains solid.
Financial Services
Loan demand declined for the eighth period in a row —
now a full year —though the rate of decline eased some-
what. The pace of decline in overall loan volume also
decelerated, but residential real estate loan volume
declined sharply after stabilizing in May and June. Loan
nonperformance continued to increase, particularly for
consumer loans. Loan pricing pushed up further. Credit
standards continued to tighten, though the share of
bankers reporting a tightening fell to its lowest level since For more information about District economic conditions visit:
February. Bankers’ outlooks remained pessimistic, with www.dallasfed.org/research/texas
K-2
Federal Reserve Bank of San Francisco

Economic activity in the Twelfth District strengthened slightly during the July through mid-August reporting period. Hiring
activity was generally stable and labor availability improved. Price increases persisted, albeit at a slower pace, and
wage pressures softened further. Retail sales increased slightly, on balance, but activity in the service sectors was
somewhat mixed. Demand for manufacturing goods was stable, and conditions in agriculture and resource-related
sectors remained largely unchanged. Residential real estate activity was flat while that of commercial real estate was
mixed. Lending activity moderated in recent weeks. Communities across the Twelfth District observed increased de-
mand for shelters and food bank services, particularly in areas impacted by adverse effects of wildfires and other severe
weather events in Hawaii and California. Contacts generally expressed a slightly more positive outlook for the economy
relative to the previous reporting period.
Labor Markets Reports mentioned continued wage growth in recent

Hiring activity was generally stable during the reporting weeks but at a slower pace than previously observed.
period, and labor availability improved further. Many However, some firms in agriculture, hospitality, commu-
employers mentioned holding their head counts flat in nity services, and gaming continued to face upward
recent weeks, and some firms reported being over- wage pressures ranging from moderate to strong in
staffed. Contacts highlighted expanded candidate pools some regions. Several employers mentioned focusing
and greater ease in finding applicants with appropriate their wage increases on entry-level jobs, partially due to
skill sets. Hiring activity in the technology sector re- new local minimum wage regulation.
mained subdued aside from positions focusing on artifi-
Prices
cial intelligence. Contacts in the agriculture and health-
Prices increased at a slower pace for most products and
care sectors noted their continued investment in automa-
services. Reports noted generally stable prices for many
tion, reducing their demand for workers on net. Nonethe-
supplies, including most building materials, paper prod-
less, hiring challenges persisted for specific positions
ucts, chemicals, and foods and beverages. However,
within many sectors, including aviation, retail trade, and
strong price pressures persisted for other product and
food services. Employee turnover generally decelerated
service categories, including utilities, insurance, used
but remained high in a few industries, including hospitali-
vehicles, packaging, and some construction materials
ty and nonprofit community services. One employer in
such as cement and gypsum. One contact attributed
manufacturing mentioned additional interest in transition-
continued price pressures to firms maintaining above-
ing interns into full-time positions. In entertainment,
average levels of inventory due to global economic un-
hiring has reportedly halted while contract negotiations
certainty.
continued over disputes between the studios and the
industry’s labor unions. Looking ahead, many employers Community Conditions
mentioned plans to hire only on a replacement basis or Housing affordability, homelessness, and food insecurity
implement possible cutbacks over the remainder of the continued to challenge communities across the District.
year. Temporary housing shelters and food banks saw in-
Wage pressures softened further across most sectors. creased demand in recent weeks, especially from older
L-1
Federal Reserve Bank of San Francisco
adults. In particular, demand for services was highest in particularly for fruits and vegetables. A contact from
areas impacted by wildfires and other severe weather Arizona reported challenges with limited availability of
events in Hawaii and California. Nonprofit organizations produce for retail outlets. Exports of some products,
reported challenges meeting the demand for behavioral such as grain and hay, reportedly fell, resulting in in-
health and substance misuse services. Several contacts creased domestic supply levels and lower domestic
highlighted ongoing consolidation among nonprofit or- prices. Major fish stocks were stable. Though yields for
ganizations due to chronic labor and funding issues. some crops remained low due to the wet winter, contacts
reported high volumes of crops carried over from the
Retail Trade and Services prior harvest and strong projections for this year’s peren-
Retail sales rose slightly in recent weeks, on balance. nial crop yields in California and Washington. Production
Retailers reported ongoing strength in consumer spend- input costs remained elevated with upward movement
ing in most areas even though shoppers continued to for some costs, such as packaging and energy.
trade down to lower cost items and reduce their spend-
ing on nonessential goods. Demand for food and bever- Real Estate and Construction
ages remained largely unchanged, while sales of pet Activity in residential real estate was flat over the report-
care products slowed somewhat. A few retailers noted ing period. Demand for single-family homes remained
lingering challenges from the pandemic, as well as tight- strong. Contacts across the District reported that homes
er access to affordable credit. Reports highlighted con- continued to receive multiple bids from prospective buy-
tinued improvements in supply chains but noted that ers. Inventories of existing single-family homes remained
inventory growth ticked down. low as owners were reluctant to relinquish lower-rate
mortgages. Multifamily rents reportedly increased but at
Activity in the consumer and business services sectors
a moderating pace. Some contacts observed that new
was somewhat mixed. Demand for business consulting
residential construction activity rebounded somewhat in
edged down, while demand for legal and accounting
past weeks, while others noted declines in permitting
services was robust. Hospitality and tourism activity
and difficulty finding lots. Raw materials were reportedly
remained solid despite increased competition from for-
more readily available.
eign destinations for leisure travelers. Demand for health
-care services and maintenance work reportedly in- Commercial real estate activity was mixed in recent
creased. weeks. Weakness in the office leasing sector continued,
and vacancy rates remained elevated. However, a con-
Manufacturing tact in Utah reported stable demand for retail and indus-
Manufacturing activity was stable over the reporting trial space, higher retail rents, and overall lower vacancy
period, on net. While many manufacturers, including rates. Commercial construction activity weakened slight-
automotive, commented on overall weakening demand, ly. Work on existing projects continued due to lengthy
orders for some manufactured products grew further. construction timelines, but plans for new projects were
Food manufacturing continued to operate at or near delayed or abandoned. Some inputs, such as electrical
capacity, and demand for capital equipment and fabricat- components and appliances, became harder to find.
ed metal products remained strong. However, some
customers temporarily delayed projects due to overall Financial Institutions
economic uncertainty and concerns over an economic Lending activity moderated in recent weeks. Demand for
downturn. Supply chain disruptions eased further, and business loans, particularly commercial real estate
some manufacturers reported normalizing inventory loans, weakened some as higher financing costs led
levels. Delivery times for supply materials continued to firms to further delay or cancel projects. Residential
improve, but availability of semiconductors remained lending remained subdued due to high mortgage rates
constrained. and limited inventories. Consumer lending, particularly
for credit cards, was reportedly solid. Some contacts
Agriculture and Resource-Related Industries reported competition for deposits strengthened to an all-
Conditions in the agriculture and resource-related sec- time high, as more customers actively sought higher
tors remained largely unchanged during the reporting deposit rates and looked at money market funds as an
period. Domestic retail and food services demand for alternative. Lending standards tightened further, and
agricultural products was stable, with strength noted credit quality remained strong. ■
L-2

Livro Bege

Uploaded by

Copyright:

Available Formats

Livro Bege

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Livro Bege

Uploaded by

Copyright:

Available Formats

For use at 2:00 PM EDT

The Beige Book

Kansas City St. Louis

St. Louis H-1 How is the information used?

Overall Economic Activity

Highlights by Federal Reserve District

Philadelphia St. Louis

Chicago San Francisco

Summary of Economic Activity

Labor Markets Prices

Commercial Real Estate

Summary of Economic Activity

Labor Markets Prices

For more information about District economic conditions visit:

Summary of Economic Activity

ufacturers. Reported price increases had peaked during Nonfinancial Services

Summary of Economic Activity

Labor Markets of costs. Per one construction contact, “nobody’s raising

Summary of Economic Activity

Labor Markets Manufacturing

Summary of Economic Activity

Banking and Finance

Summary of Economic Activity

Labor Markets Multiple retail contacts noted that back-to-school shop-

Banking and Finance

Summary of Economic Activity

Labor Markets although credit card transaction costs increased, they

Summary of Economic Activity

Labor Markets Prices

Commercial real estate activity was lower. Multifamily

Summary of Economic Activity

Labor Markets Prices

Community Conditions Community and Regional Banking

Summary of Economic Activity

Retail Sales most expecting a decrease in loan demand and a deteri-

Summary of Economic Activity

Labor Markets Reports mentioned continued wage growth in recent

You might also like