Fed’s Beige Book. Economic activity increased slightly to moderately

Below is a summary of the Overall activity and by district. A key and oft repeated word is “slight” or “moderate”.

Not to hot. Not to cold.

Overall Economic Activity:

• Economic activity increased slightly to moderately across the twelve Federal Reserve Districts in late November and December.
• Consumer spending moved up moderately, with strong holiday sales exceeding expectations.
• Vehicle sales grew modestly.
• Construction activity decreased, with high costs for materials and financing weighing on growth.
• Manufacturing decreased slightly on net; some manufacturers stockpiled inventories in anticipation of higher tariffs.
• Residential real estate activity was unchanged, constrained by high mortgage rates.
• Commercial real estate sales edged up.
• Nonfinancial services sector grew slightly, with growth in leisure, hospitality, and transportation (notably air travel).
• Truck freight volumes declined.
• Financial service providers reported modest growth in lending and little change in asset quality, but concerns arose about delinquencies among small businesses and lower-income households.
• Nonprofit social service agencies faced high demand amidst uncertainty about funding.
• Agricultural conditions remained weak, with lower farm incomes and weather-related struggles. Avian flu reduced egg supplies, raising prices.
• Energy activity was mixed.
• More optimism about 2025 outlook, though concerns remain about immigration and tariff policy affecting the economy.

Labor Markets:

• Employment ticked up slightly, with six Districts reporting increases and six reporting no change.
• Service industries, notably healthcare, continued to see job growth.
• Construction employment increased slightly, while manufacturing employment was flat.
• Difficulty finding skilled workers was reported across multiple sectors.
• Layoffs remained rare, though some contacts expressed greater uncertainty about future staffing needs.
• Wage growth picked up to a moderate pace, but there were reports of easing wage pressures.

Prices: Prices rose modestly

• Prices increased modestly overall, with growth ranging from flat to moderate.
• Selling prices rose modestly in most Districts, with some instances of flat or declining prices, particularly in retail and manufacturing.
• Input costs increased, particularly for insurance prices (notably health insurance).
• Flat or lower input costs were reported in some areas, especially for fuel.
• Prices expected to rise in 2025, with concerns about higher tariffs contributing to price increases.

District Summary:

Boston

• Economic activity increased slightly, with modest growth in tourism, home sales, and retail sales.
• Prices were steady despite slight cost pressures.
• Employment stable; wages increased modestly.
• Optimistic expectations, though some uncertainty remains.

New York

• Economic activity increased slightly; employment grew slightly.
• Stronger-than-expected holiday retail sales.
• Commercial real estate markets improved slightly, especially NYC office demand.
• Selling prices rose modestly, with manufacturers reporting stable prices.

Philadelphia

• Business activity grew slightly, with auto sales leading consumer spending.
• Manufacturers reported a slight decline in activity.
• Employment and wages rose modestly.
• Inflation concerns driven by deficits, tariffs, and immigration.

Cleveland

• Business activity grew modestly; stronger-than-expected retail sales.
• Manufacturers experienced soft demand.
• Employment flat; wages and prices grew modestly.
• Positive outlook for the coming months.

Richmond

• Modest economic growth with moderate increases in consumer spending and travel.
• Financial services reported modest growth; manufacturing slowed slightly.
• Employment unchanged; price growth moderate.

Atlanta

• Economic activity expanded modestly; employment steady, wages grew slowly.
• Consumer spending and housing demand grew moderately.
• Manufacturing declined slightly, while energy activity grew modestly.

Chicago

• Slight growth in economic activity; modest increases in consumer spending and employment.
• Construction and real estate remained flat.
• Farm incomes in 2024 were below 2023 levels.
• Prices and wages grew modestly.

St. Louis

• Slight economic expansion; holiday sales exceeded expectations.
• Reports reflected a seasonal slowdown, but contacts were positive about the year ahead.

Minneapolis

• Slight growth in economic activity; employment increased slightly.
• Holiday sales were upbeat, surpassing pre-pandemic levels.
• Manufacturing contracted modestly, but optimism remains for 2024.

Kansas City

• Slight expansion in economic activity, led by consumer spending.
• Consumers relied more on long-term financing and debt consolidation.
• Optimism for accelerated growth and hiring in coming months, though concerns over policy changes persist.

Dallas

• Moderate expansion in the economy; manufacturing resumed growth.
• Retail revenues and loan demand expanded.
• Home sales increased slightly, but energy activity remained flat.
• Employment rose slightly, with improving outlooks despite policy concerns.

San Francisco

• Slight expansion in economic activity; employment and prices were stable.
• Retail sales grew modestly, while activity in agriculture softened slightly.
• Manufacturing and commercial real estate were mixed, with steady housing and lending activit

This article was written by Greg Michalowski at www.forexlive.com.