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National Summary: November 2022

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Beige Book: National Summary

November 30, 2022

This report was prepared at the Federal Reserve Bank of Boston based on information collected on or before November 23rd, 2022. This document summarizes comments received from contacts outside the Federal Reserve System and is not a commentary on the views of Federal Reserve officials.

Federal Reserve Banks collect information for the Beige Book from a variety of business and nonbusiness sources. As of November 30, 2022, seven Banks now include individual community sections with information from nonbusiness sources, while the remaining Banks will continue to include such information within the existing structure of their District reports.

Overall Economic Activity
Economic activity was about flat or up slightly since the previous report, down from the modest average pace of growth in the prior Beige Book period. Five Districts reported slight or modest gains in activity, and the rest experienced either no change or slight-to-modest declines. Interest rates and inflation continued to weigh on activity, and many contacts expressed greater uncertainty or increased pessimism concerning the outlook. Nonauto consumer spending was mixed but, on balance, eked out slight gains. Inflation pushed low-to-moderate income consumers to substitute increasingly to lower-priced goods. Travel and tourism contacts, by contrast, reported moderate gains in activity, as restaurants and high-end hospitality venues enjoyed robust demand. Auto sales declined slightly on average, but sales increased significantly in a few Districts in response to higher inventories. Manufacturing activity was mixed across Districts but up slightly on average. Demand for nonfinancial services was flat overall but softened in some Districts. Higher interest rates further dented home sales, which declined at a moderate pace overall but fell steeply in some Districts; apartment leasing started to slow, as well. Residential construction slid further at a modest pace, while nonresidential construction was mixed but down slightly on average. Commercial leasing weakened slightly, and office vacancies edged up. Bank lending saw modest further declines amid increasingly weak demand and tightening credit standards. Agricultural conditions were flat or up a bit, and energy sector activity increased slightly on balance.

Labor Markets
Employment grew modestly in most districts, but two Districts reported flat headcounts and labor demand weakened overall. Hiring and retention difficulties eased further, although labor markets were still described as tight. Scattered layoffs were reported in the technology, finance, and real estate sectors. However, some contacts expressed a reluctance to shed workers in light of hiring difficulties, even though their labor needs were diminishing. Wages increased at a moderate pace on average, but a few Districts experienced at least some relaxation of wage pressures. Opinions about the outlook pointed to stable or slowing employment growth and at least modest further wage growth moving forward.

Consumer prices rose at a moderate or strong pace in most Districts. Still, the pace of price increases slowed on balance, reflecting a combination of improvements in supply chains and weakening demand. Retail prices faced downward pressure as consumers increasingly sought discounts. Prices fell for some commodities, including lumber and steel, but food prices increased further or remained elevated in some Districts. Housing rent growth started to moderate in some Districts and home prices grew less rapidly or declined outright amid weak demand. Inflation was expected to hold steady or moderate further moving forward.

Highlights by Federal Reserve District

Business activity softened slightly amid mixed results. Employment levels and prices were mostly unchanged. Wage growth was steady at a moderate pace. Restaurant owners enjoyed robust demand. Real estate markets weakened further. Most contacts remained optimistic for their own results but expected some degree of economic downturn in 2023.

New York
Economic activity declined modestly. While job growth picked up slightly and labor shortages eased somewhat, hiring plans weakened. Wage growth slowed, while the pace of input and selling price increases remained elevated and was little changed. Regional banks reported weakening loan demand, tightening credit, and rising delinquencies. Businesses were increasingly pessimistic about the outlook.

Business activity held fast during the current Beige Book period even as it teetered on the edge of decline. Although wage and price inflation continued to subside, their elevated levels and rising interest rates have subdued consumer spending in many sectors. Employment continued to rise slightly, although some firms have begun layoffs. Expectations deteriorated.

District business activity slowed modestly in recent weeks as previously robust sectors saw some softening while previously weak sectors remained weak. Still, firms continued adding to their payrolls, and stiff competition for workers kept upward pressure on wages. Input cost increases remained widespread, but a smaller share of contacts reported increases in selling prices.

The regional economy grew slightly on balance, as retail spending, travel, and tourism picked up and offset declines in activity in manufacturing, real estate, and nonfinancial services. Employment grew moderately and many firms still looked to fill open positions and were raising wages by more than in recent years. Price growth remained strong in recent weeks.

Economic activity grew slightly. Labor market tightness eased, but wage pressures continued. Most nonlabor costs moderated. Retailers reported stable consumer demand. Demand for new autos was robust. Leisure travel activity was steady and business travel improved. Housing demand declined. Transportation activity weakened. Deposit growth at financial institutions slowed.

Economic activity was little changed. Employment increased moderately; manufacturing increased slightly; consumer and business spending were unchanged; and construction and real estate decreased modestly. Nonbusiness contacts saw little change in District economic activity. Prices rose rapidly, wages were up moderately, and financial conditions were unchanged on net. Agriculture profit expectations for 2022 were up a bit.

St. Louis
Economic conditions have remained unchanged since our previous report. Labor shortages remained widespread, but a rising share of firms were able to find and retain workers. Homebuying activity continued to slow, and rental rates fell for the first time this year. Transport demand fell, but the industry continued to struggle with rising input costs and a shortage of drivers.

Economic activity in the region expanded modestly in recent weeks. Employment grew slightly and job openings softened but firms generally reported maintaining hiring plans. Price pressures were persistent despite some isolated anecdotes about decelerating inflation. Early reports on holiday spending were cautiously upbeat. Labor market pressures on Indian reservations were more acute than elsewhere.

Kansas City
Real economic activity in the Tenth District declined slightly. Job growth was subdued as labor demand cooled. Prices continued to rise at a robust pace, but several contacts noted growth in prices of construction materials and other manufacturing inputs slowed. Multifamily housing real estate activity declined abruptly in recent weeks, while energy activity expanded slightly. Farm incomes grew slightly, despite adverse drought conditions.

Modest economic growth continued, though persistent declines were seen in retail spending, home sales, and lending activity. Job growth was solid but there were reports of layoffs and a slowdown in hiring. Input and labor cost increases continued, prompting cost cutting and downsizing for some firms. Outlooks were generally pessimistic, with contacts again citing concerns about inflation, labor challenges, and slowing demand.

San Francisco
Economic activity expanded modestly. Employment levels grew at a modest pace amid tight labor market conditions. Wages and prices rose at a slower pace relative to the previous reporting period. Demand for retail goods and services trended up. Manufacturing activity strengthened, while conditions in the agriculture sector were stable but weak. Residential real estate activity weakened, and lending activity declined moderately.