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Fed’s Beige Book reiterated the economy expanded at a moderate pace
Fed’s Beige Book reiterated the economy expanded at a moderate pace.
But there was a big “however,” something the Fed typically does not express:
“several Districts reported grow signs of a slowdown in demand, and contacts in five Districts noted concerns over an increased risk of a recession.”
Most Districts reported moderation in consumer spending as higher food and gas prices diminished households’ discretionary income.
Auto sales were sluggish with low inventories still impacting.
Leisure travel was “healthy.” Manufacturing was mixed. Non-financial services firms saw stable to slightly higher demand. Housing demand weakened.
As in the prior report, the outlook for future economic growth was mostly negative.
Employment generally continued to rise at a moderate pace and conditions were tight overall.
But there was some sign of modest improvement in labor availability.
Most Districts reported wage growth.
“Substantial” price increases were reported across all Districts, at all stages of consumption, with food, commodities, and energy (particularly fuel) cost remaining “significant.”
There was some moderation in construction materials.
Pricing power was steady, but firms in some sectors like travel and hospitality, were able to pass through sizeable increases to consumers. That is seen persisting through the year.
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