Beige Book Shows US Economy Turning More Sluggish

The Federal Reserve's Beige Book report showed small increases in activity in four districts, no change in six districts, and slight to moderate declines in two districts.

Wednesday, May 31, 2023 - 07:13 PM

The Fed's beige book, released today, was dull. It signaled that the US economy was at best sluggish, and described economic activity as having "little changed in general during April and early may." Four Fed districts reported a small increase in activity. Six Fed districts showed no change and two Fed district saw a slight to moderate decrease. The outlook for future growth has deteriorated slightly, but contacts are still expecting a continued expansion of activity. Summary of the overall picture

In most districts, consumer expenditures are either steady or increasing. Many report growth in leisure and hospitality spending.

On balance, education and healthcare organizations have seen steady activity.

Supply chain issues improved and manufacturing activity increased in many districts.

The demand for transportation services is down, particularly in trucking where contacts report a "freight slump."

The residential real estate market has picked up in the majority of Districts, despite low inventory levels.

The commercial construction and real estate sector decreased in general, with the office segment remaining a weak point.

In most districts, the outlook for farm income was down. Energy activity also remained flat or even decreased due to lower gas prices. In most districts, financial conditions were either stable or slightly tighter.

Contacts from several districts noted an increase in delinquencies on consumer loans, which was returning to levels seen before the pandemic.

The high inflation rate and the ending of Covid-19 benefits continue to put pressure on the budgets for low- and medium-income households. This has led to an increase in demand for social services including housing, food, and other necessities.

The Beige Book, when it comes to the labor market, notes that "employment has increased in many Districts but at a slower rate than previous reports." The labor market remained strong overall, and contacts reported difficulty in finding workers of all skill levels across industries. Having said that,

Contacts across the Districts noted a cooling of the labor market, with easier hiring in finance, construction, and transportation.

Many contacts reported that they had full staff.

Some reported that they had halted hiring or reduced headcounts because of a weaker demand, either actual or projected, or greater uncertainty regarding the economic outlook.

Wages grew modestly, as in the previous report.

The report also notes that the price level has increased moderately during the period.

Though the rate of growth slowed down in many districts.

Most Districts expect a similar rate of price increase in the next few months. At the same,

Demand and cost increases have continued to drive up consumer prices.

Though several districts noted greater price sensitivity among consumers than the previous report. Nonlabor costs increased overall, but contacts reported that

Cost pressures have eased, and some inputs such as shipping and certain materials are now cheaper.

In most districts, home prices and rents increased slightly after a period of little growth.

We found summaries of the regional Feds:


In general, business activity was flat. Retail, restaurant and manufacturing contacts reported modest revenue increases. The labor demand for many positions weakened, but the headcounts only decreased slightly. The average wage and price pressures have eased, but there were some significant price increases reported.

The outlook is cautiously optimistic


New York

The regional economy declined moderately, with a persistent weakness in the manufacturing industry. The labor market is still solid, despite scattered signs of cooling caused by increased uncertainty. Inflationary pressures were persistent.

The conditions in the financial sector as a whole continued to worsen.


The business activity has continued to decrease during the current Beige Book Period. Contacts report positive consumer sales but high profit margins may mean lower volumes. The availability of labor improved and employment increased slightly. Inflation and wage growth continued to decline.

Contacts expressed concern about the debt limit and bank failures, but continued to expect positive growth in the next six-month period.


The Fourth District saw a stable economy and steady employment, with little change in cost pressures and prices. The Fourth District's economic activity and employment were stable, while cost and price pressures were little changed.


In recent weeks, the regional economy has remained stable. The consumer spending on retail products declined, but the spending on travel and tourist activities increased moderately. Retailers' lack of ordering inventory was felt by the manufacturing and transport sectors.

Commercial real estate lending and activity has slowed.

Overall, the economy remained strong and employment increased modestly.


The economy grew slowly. The labor markets became less constrained, and wage pressures decreased. New auto sales were strong. Business travel increased, while leisure travel remained at pre-pandemic rates. Demand for housing was high. Transport activity has declined. Demand for energy was high. Agriculture conditions have slowed.


The economic activity was not much different. The employment rate increased modestly, non-business contacts experienced a slight increase in activity, consumer and business expenditures were flat and manufacturing activity was down. The prices and wages increased moderately while the financial conditions tightened modestly. The expectations for farm incomes by 2023 have decreased a little.

St. Louis:

The economic conditions are unchanged from our last report. The labor markets were tight but there was an increase in reports of ease. Due to the inability of firms to pass on increases in input prices, they reported a margin compression. The demand for residential real estate remained largely the same, while that of commercial properties declined. The outlook deteriorated due to worries about a weakening of demand and macro-uncertainty.


Since early April, the region's economic growth has been modest. The labor market was strong, wage pressures were high and there were significant layoffs. Prices increased modestly, but the levels of production remained high. Some manufacturers reported lower input costs, but the majority did not. Travel was very popular and consumer spending increased modestly. Minority and women-owned businesses saw a slight decline in activity.

Kansas City:

The total economic activity in the Tenth district remained relatively unchanged during May. The number of jobs available remained high, but the job growth slowed down. Businesses were more selective when it came to hiring, according to reports. The majority of businesses predicted that the price increases for finished goods will probably moderate in the next year. The growth in rental rates for housing was also predicted to moderate in the coming year, even though they remain high in many areas of the District.


The service and retail industries continued to grow modestly, with gains in revenue. Housing contacts reported a good spring selling season with stable prices. The credit conditions continued to tighten, and the loan demand declined. Payrolls increased moderately and wage growth was stubbornly high. Outlooks continue to worsen. Contacts expressed concern about waning consumer demand, rising rates of interest, and the health of the overall economy.

San Francisco:

The economy grew a little. The employment levels remained stable despite tight labor market conditions. Wage and price increases also slowed down. Retail sales increased modestly and services activity picked up a bit. Manufacturing activity was strong, but conditions in agriculture were slightly weaker. The residential and commercial real estate sector declined, while the financial sector deteriorated slightly.

The Fed is now more confident about the reasons for recent concerns over loans, lending standards, and tightening of conditions. Just take a look at the graph above, which shows the frequency with which a key word appears in the Beige Book.