Federal Reserve Beige Book: Overall economic activity in most regions remains stable, with inflation levels continuing to be moderate

On Wednesday, the Federal Reserve stated in its latest "Beige Book" report that since early September, economic activity in most parts of the United States has remained relatively unchanged, with two Federal Reserve districts reporting moderate growth. Reports on consumer spending varied, with some districts noting changes in consumer purchasing patterns, mainly shifting towards cheaper alternatives.

Regarding the Federal Reserve's dual mandate of employment and inflation, the "Beige Book" indicates that over half of the districts reported "slight or moderate" job growth, with limited layoffs in many areas and low levels of labor mobility. Inflation levels continue to remain moderate, with most districts experiencing similar "slight or moderate" price increases, and several districts mentioning a slowdown in wage growth.

In the Atlanta Federal Reserve district, which includes areas most severely affected by Hurricane Helen, the report stated that the storm led to a decline in the tourism industry and caused "significant losses and damage" to farmers in parts of southern Georgia and Florida.

This edition of the "Beige Book" mentioned the uncertainty surrounding the November U.S. elections approximately 15 times, citing the elections as one of the factors leading to consumer and business delays in investment, hiring, and purchasing decisions.

Analysis suggests that the Beige Book report indicates that despite unexpected increases in official employment, consumer price, and retail sales data in September, the U.S. economy continues to slow down. Despite the recent uptick in economic data, Federal Reserve officials have recently cited anecdotes from contacts as reasons to continue cutting interest rates.

The New York Federal Reserve compiled the latest version of the "Beige Book," using information collected up to October 11th. The report includes anecdotes and comments on economic conditions from businesses and other contacts in the Federal Reserve's 12 districts.

Below are key points from reports by contacts in the Federal Reserve's 12 districts:

Boston: "Recruitment in the retail and hospitality sectors in the Cape Cod area received a boost during the summer due to the restoration of short-term visas for foreign workers and an increase in the supply of seasonal domestic workers in the United States."

New York: "Restaurant sales declined due to reduced visitors. However, attendance at Broadway shows has improved slightly, with recent attendance rates only slightly below pre-pandemic levels."

Philadelphia: "Contacts noted that most industries still show weak growth in loan demand. The most common reason customers cite for delaying investment plans is the expectation of further interest rate cuts and the upcoming elections."

Cleveland: "Most contacts across various industries reported that they have not adjusted sales prices in recent weeks, and customers are still reluctant to accept additional price increases."

Richmond: "While many companies reported improved candidate quality and moderate wage growth, some companies still struggle to find specific types of workers. To attract these hard-to-find workers, companies have increased wage hikes and sought external assistance."

Chicago: "Contacts indicated that customers across income groups are downgrading their consumption. For example, low- and middle-income consumers are opting for cheaper meal deals at fast-food restaurants instead of pricier options, while high-income consumers are choosing more affordable furniture and appliances." Atlanta: "Car dealerships reported an increase in inventory and a decrease in demand, exceeding normal seasonal declines. They also noted that while sales of luxury cars have slowed down, buyers are increasingly pushing prices down."

St. Louis: "Several contacts in the hotel industry reported that demand is higher than a year ago, and in most cases, meeting expectations. However, spending on concession items at their venues is lower, as tourists seem to be more sensitive to price increases than to promotional prices."

Minneapolis: "Companies with vacant positions reported a significant improvement in labor supply. A source from a Minnesota supply company stated that they received 12 applications for previously hard-to-fill high-skilled driving positions, exclaiming, 'I can hardly believe it.'"

Kansas City: "Many companies reporting business expansion attributed growth to promotions, discounts, or offers. Meanwhile, many companies reporting a decrease in consumer spending emphasized a reduction in consumption of high-end goods and services."

Dallas: "Contacts mentioned an increase in requests for elderly assistance, attributed to inflation. A non-profit organization reported an increase in vacancy rates in housing facilities exclusively for the elderly, as some seniors re-enter the workforce out of economic necessity, causing them to lose eligibility for these low-cost housing options."

San Francisco: "Consumers continue to seek discounts and are cautious about purchasing non-essential items at full price. Several reports indicated that household spending in the Pacific Northwest region has decreased due to recent and ongoing labor disputes."