US Beige Book

Economic activity increased at a slight to moderate pace for ten of the twelve Federal Reserve Districts, while one District reported a slight decline and one reported no change. Consumer spending remained mixed across Districts and increasingly bifurcated across income groups amid affordability pressures. Higher-income households remained resilient and less sensitive to price increase, while middle-income households were described as “squeezing more life out of every dollar before deciding to spend it,” and low-income consumers showed greater financial strain. Overall, there were reports of increased credit card usage, fewer retail visits, and stronger demand for necessities. Auto dealers reported softer new vehicle demand tied to affordability and fuel costs, alongside substitution toward used and hybrid vehicles. By contrast, manufacturing activity increased at a modest to strong pace for nine of the Districts and only one noted a slight decline from the previous period. Banking conditions were stable across most Districts; however, residential mortgages, consumer, and agricultural loan delinquencies were noted as rising in several of the Districts. Agriculture conditions were unchanged or declined for most of the Districts, with cost pressures intensifying from fuel and fertilizer spikes. Energy activity increased in two of the markets, but Districts reported that the outlook remains highly uncertain leading producers to hold off on materially expanding activity. More broadly, business outlooks for the next six months were reported to have little change in anticipated growth, as elevated uncertainty and signs of weakening consumer spending weighed on sentiment. FED BEIGE BOOK: U.S. ECONOMIC ACTIVITY EXPANDED AT A SLIGHT TO MODERATE PACE ACROSS MOST FED DISTRICTS, THOUGH ELEVATED UNCERTAINTY AND SIGNS OF SOFTENING CONSUMER SPENDING CONTINUED TO WEIGH ON BUSINESS SENTIMENT. FED BEIGE BOOK: INFLATION PRESSURES STRENGTHENED, WITH MOST DISTRICTS REPORTING HIGHER PRICE GROWTH THAN IN THE PRIOR REPORT, WHILE EMPLOYMENT REMAINED LARGELY FLAT ACROSS THE COUNTRY.

Overall economic activity increased at a slight to modest pace in eight of the twelve Federal Reserve Districts, while two Districts reported little change and two Districts reported slight to modest declines. The conflict in the Middle East was cited as a major source of uncertainty that complicated decision-making around hiring, pricing, and capital investment, with many firms adopting a wait-and-see posture. Manufacturing activity rose slightly to moderately in most Districts. Banking sector activity was generally steady with loan demand stable to up moderately. On balance, consumer spending increased slightly despite harsh winter weather in some regions and higher fuel prices. Many Districts continued to report signs of consumer financial strain, increased price sensitivity, and rising demand at food banks and other social service organizations, while spending among higher-income consumers was resilient. Housing market activity softened across several Districts as heightened uncertainty and rising mortgage rates dampened buyer demand. Commercial real estate markets improved, with strength in industrial properties, especially data center projects. Office markets saw solid demand for Class A space but weaker demand for lower-tier properties. Energy activity was up slightly as oil prices rose, though many producers remained cautious about increasing drilling due to uncertainty about the persistence of higher prices. Agricultural activity was mixed, and several Districts reported that rising crop prices helped offset steep price increases of fertilizer and fuel. Business outlooks varied amid widespread uncertainty about future conditions. FED BEIGE BOOK (DATA THRU APR 6): ECONOMIC ACTIVITY GREW AT SLIGHT TO MODEST PACE IN 8 OF 12 FED DISTRICTS; 2 FLAT, 2 REPORTED SLIGHT TO MODEST DECLINES FED BEIGE BOOK: BUSINESS OUTLOOKS MIXED AMID WIDESPREAD UNCERTAINTY; WAGES CONTINUED TO RISE ...

Overall economic activity increased at a slight to moderate pace in seven of the twelve Federal Reserve Districts, while the number of Districts reporting flat or declining activity increased from four in the prior period to five in the current period. Although consumer spending increased slightly on balance, two Districts reported ongoing declines, and many noted that sales were dampened by economic uncertainty, increased price sensitivity, and lower-income consumers pulling back on spending. Districts impacted by winter storms said that retail traffic generally slowed, and one District said immigration enforcement activity negatively affected customer demand in urban areas. Auto sales were mostly down for Districts that reported on them, with many citing continuing affordability issues. Manufacturing activity improved overall since the previous reporting period, with eight Districts reporting varying degrees of growth and two reporting declines. Manufacturing contacts in many Districts reported increases in new orders, and several cited boosts in demand from data centers and, relatedly, energy infrastructure. Transportation activity was mixed across Districts that reported on it, with three reporting contractions and two reporting modest growth. Overall, financial services activity was reported as stable to up, with commercial lending being the primary area of strength. For most Districts that reported on residential real estate and construction, sales and activity decreased slightly, with low inventories and affordability remaining key issues. Nonresidential construction activity was mixed across reporting Districts but increased slightly on net. Among reporting Districts, agricultural conditions were mostly flat, and energy activity grew modestly on balance. Overall, economic expectations were optimi FED BEIGE BOOK: WAGES ROSE AT A MODEST TO MODERATE PACE IN MOST DISTRICTS AS FIRMS COMPETED FOR WORKERS. FED BEIGE BOOK: ECONOMIC ACTIVITY GREW SLIGHTLY TO MODERATELY IN 7 OF 12 DISTRICTS, WHILE 5 DISTRICTS REPORTED FLAT OR DECLINING CONDITIONS. FED BEIGE BOOK: MOST DISTRICTS EXPECT SLIGHT TO MODERATE ECONOMIC GROWTH IN THE COMING MONTHS. FED BEIGE BOOK: PRICES ROSE MODERATELY IN RECENT WEEKS, WITH 8 DISTRICTS REPORTING MODERATE INCREASES AND 4 REPORTING SLIGHT OR MODEST GAINS.

Overall economic activity increased at a slight to modest pace in eight of the twelve Federal Reserve Districts, with three Districts reporting no change and one reporting a modest decline. This marks an improvement over the last three report cycles where a majority of Districts reported little change. Most banks reported slight to modest growth in consumer spending this cycle, largely attributed to the holiday shopping season. Several Districts also noted that spending was stronger among higher-income consumers with increased spending on luxury goods, travel, tourism, and experiential activities. Meanwhile, low to moderate income consumers were seen to be increasingly price sensitive and hesitant to spend on nonessential goods and services. Auto sales were little changed to down across most Districts. Manufacturing activity varied with five Districts reporting growth and six reporting contraction. Nonfinancial services demand was generally seen as steady to increasing somewhat. Banking conditions were generally reported as stable or improving, with some increased demand coming from credit cards, home equity loans, and commercial lending. Residential real estate sales, construction, and lending activity softened in the majority of Districts that report on the sector. Agriculture conditions were largely unchanged with only Atlanta reporting a modest decline due to weaker demand for exported commodities. Energy demand and production was flat to down slightly. Outlooks for future activity were mildly optimistic with most expecting slight to modest growth in coming months. FED BEIGE BOOK SAYS OUTLOOKS FOR FUTURE ACTIVITY ARE MILDLY OPTIMISTIC WITH MOST DISTRICTS EXPECTING SLIGHT TO MODEST GROWTH IN THE COMING MONTHS, WHILE PRICES ROSE AT A MODERATE PACE ACROSS MOST DISTRICTS WITH ONLY TWO REPORTING SLIGHT PRICE GROWTH