Overall economic activity in the US has been stable since September. This was stated in the Federal Reserve’s Beige Book published on Wednesday evening.
Most districts indicated that overall economic activity has seen little to no change since the September report. Consumer spending was inconsistent, especially in retail and car dealerships, due to differences in prices and product offerings.
Tourism activities continued to improve. While some districts reported a slight slowdown in consumer travel, several noted an increase in business travel.
In the banking sector there was a slight to modest decline in loan demand. Customer credit quality was generally described as stable or healthy, with default rates still at historically low levels but rising slightly.
Conditions in the real estate market had changed little and the inventory of homes for sale remained low.
In manufacturing, activity was mixed, although contacts in several districts indicated improving prospects for the sector.
The short-term outlook for the economy was generally described as stable or with slightly weaker growth. Expectations were mixed among companies for whom the holiday shopping season is a key sales driver.
Job market
The tightness in the labor market continued to decrease across the country. Most districts reported slight to moderate increases in total employment, and businesses were less likely to hire.
Several districts reported improvements in hiring and retention, with the pool of candidates for employment expanding and those who received offers less likely to negotiate terms of employment.
However, most districts still reported continued challenges in recruiting and hiring skilled professionals. Several emphasized that older workers will remain part of the workforce, either in their existing positions or returning in a part-time capacity.
Wage growth remained modest to moderate in most districts. Contacts in many districts reported less candidate resistance to salary offers. There were several reports of companies adjusting their compensation packages to limit higher labor costs. Including allowing remote work in lieu of higher wages, reducing bonuses or other pay improvements, shifting pay to more performance-based models and passing on a greater share of health care costs and other benefits to employees.
Prices
Prices generally continued to rise at a modest pace. Districts noted that input cost increases have slowed or stabilized for manufacturers, but continue to rise for service sector businesses.
Increases in fuel costs, wages and insurance have contributed to price growth in the districts. Selling prices rose at a slower pace than input prices and companies have struggled to pass on cost pressures as consumers have become more sensitive to prices. The result is that companies have more difficulty maintaining desired profit margins.
Overall, companies expect prices to rise in the coming quarters, but at a slower pace than previous quarters. Several districts reported a decrease in the number of businesses expecting significant price increases in the future.