Beige Book Find "Little Change" As Outlook Turn Weaker But "Recession" Mentions Tumble

The Fed's latest beige book released this afternoon was a rather boring affair, one signaling "little to no change in economic activity" since the September report.

Wednesday, Oct 18, 2023 - 06:31 PM

The Fed

latest beige book

The report released today was rather dull, indicating "little or no change in the economic activity" from September's report.

One month after the aforementioned aforementioned,

rather downbeat Beige Book

The Beige Book indicates that consumer spending is "mixed" due to price and product differences, particularly among auto dealers and general retailers. Tourism activity has "continued improving, even though some Districts have reported a slight slowdown in consumer travel and a few districts have noted an increase in business travel.

Despite a decline in consumer credit quality, banking contacts reported a "modest to slight" drop in the loan demand.

"Generally described as stable or health, with delinquency still historically low but slightly rising."

The real estate market conditions remained the same - meaning that they were catastrophic - and there was a low inventory of houses for sale. The report noted a silver lining, namely the manufacturing sector, which was deemed mixed. However, "contacts from multiple districts reported an improved outlook for this sector."

The Beige Book ends with a look at the big picture.

The "near-term outlook" for the economy is generally characterized as stable or with slightly lower growth

The expectations of companies for whom the holiday shopping season is a major driver of sales are mixed, indicating continued confusion regarding the true state of the customer.

The Beige Book has more information, starting with the labor market. "The tightness in the country continued to ease."

The majority of districts reported a slight to moderate increase in employment and that firms were not hiring as urgently.

Many districts reported an improvement in hiring and retention, as the candidate pool has grown and candidates who have received offers are less likely to negotiate employment terms.

However, most Districts still reported

Recruitment and hiring of skilled tradespeople is a persistent challenge


Some highlighted that

The number of older workers in the workforce is increasing

They can either stay in their current position or return in a part-time role.

In most districts, wage growth was modest to moderate.

Reports of contacts across several Districts

Candidates are less likely to reject wage offers.

Multiple reports have been made of

Companies are modifying their compensation packages in order to offset higher labor costs.

Included in this are allowing employees to work remotely instead of paying higher wages, reducing signing-on bonuses and other wage increases, moving compensation to a more performance-based model, and passing along a larger share of the healthcare and other benefit costs to their employees.

Prices are a little higher than usual.

Prices increased at a moderate pace in general.

Districts reported that the increase in input costs has slowed for manufacturers or stabilised, but continues to rise for firms in the services sector.

The increase in prices in all districts was largely due to increases in fuel, wage and insurance costs.

The sales price increased slower than the input prices as businesses struggled with passing on cost pressures to consumers who had become more sensitive to pricing.

In turn, companies struggled to keep desired profit margins.

In general, companies expect prices to rise in the coming quarters.

But at a slower pace than in the past few quarters.

Multiple Districts have reported

The number of companies expecting significant price increases in the future has decreased


We found the following summaries of regional Feds to be particularly noteworthy:


The price increase was modest, as were the business and employment growth. Cape Cod's wet summer produced mixed results. Boston tourism contacts expect a strong demand for 2024 while Boston real estate contacts remain pessimistic. Both hiring plans and price increases were relatively modest.

New York

The regional economy weakened moderately, but the labor market remained strong. Spending by consumers increased at a slower rate, as declines in experiences were offset by an increase in goods. The financial conditions have weakened a bit. Inflationary pressures have moderated.


The business activity has continued to decrease slightly over the period covered by the Beige Book. Overall, consumer spending and manufacturing activity declined. The employment rate increased again as the labor pool improved. The rate of wage growth and inflation has slowed down but continued to be modest. The expectations for economic growth were subdued.


The economic activity in the Fourth District has remained relatively unchanged in recent weeks. The manufacturers noted an increase in activity, but expressed concern over the potential negative impacts of UAW's strike. The hiring activity was flat and more firms reported that wages were held steady after large increases in the last few years. Many manufacturers reported stabilizing input costs, whereas service providers reported increasing vendor costs.


The economy of the region contracted slightly during this time period. Spending by consumers increased slightly, but the reports varied. Inventory constraints in residential real estate impacted the market. Commercial real estate lending and activity declined. In recent weeks, employment increased modestly while price growth remained unchanged.


The economy grew slowly. The labor markets have improved and wage pressures have eased. New car sales were robust. International and business travel grew, but domestic leisure travel decreased. Demand for housing fell. Transport activity slowed down. The energy demand is flat. Mixed conditions in agriculture.


The economic activity increased modestly. The employment rate increased modestly, consumer and business expenditures were slightly up, non-business contacts experienced little change, and manufacturing, construction and real estate activity declined modestly. While wages and prices rose modestly, financial conditions tightened a little. The expectations for farm incomes 2023 have not changed much.

St. Louis

The economic conditions are unchanged from our last report. The labor market remained tight and employers reported frequent difficulty in finding the desired skills where there had been an increase in applications. The increase in prices was modest due to increased input costs. However, the rate of growth slowed. Businesses reported weaker consumer demand, and difficulties in passing on input cost.


The regional economic activity has increased slightly. The employment rate grew modestly, and the labor demand slowed. As job seekers sought higher-paying positions, wage pressures remained stable. Prices pressures have moderately eased. The consumer spending and auto sales were modestly up. Most contacts reported that higher interest rates on long-term loans had dampened their outlook for the economy in 2013.

Kansas City

The economic conditions in the Tenth district have weakened slightly over the past few weeks due to lower activity in energy, agriculture and commercial real estate. Many bankers described their appetite for loans as being on a "loan-diet". The employment levels were stable but wages grew slower, especially among entry-level positions. Prices continued to rise at a moderate rate, but the growth of housing rental rates was significantly slower.


The modest economic expansion has continued. Growth in the service sector is slowing down, but manufacturing and energy are rebounding. Retail and financial service activity decreased. The employment growth was modest and wages continued to increase. Outlooks have generally been weakened, as contacts expressed concern about the worsening of business conditions, rising interest rates, and the political climate.

San Francisco

The economy was in net a stable state. The tightening of the labor market has eased and wage and price pressures have moderated. Retail sales were strong, while manufacturing activity was largely unchanged. The activity in the service and real estate sector slowed. The financial sector has cooled down further since the last report. Housing affordability continues to be a problem for local communities.

Looking at the data visually, we can see that mentions of inflation are the lowest since January 2022.

The chart above is perfectly correlated, even if it has a 3-month lag. It shows the price of crude oil. Expect a spike in the number of inflation mentions when Beige Book participants realise that crude oil is only a few cents short of the 2023 highs, and the Middle East is exploding.

While the word "slow" was mentioned more often, it did so at a much higher rate...

What we found most intriguing is that in October, after the mentions of a recession had risen to their highest level since 2018, they dropped by over half. They now stand at just 6, which is right on average for the last few years.

The full Beige Book contains more information.