Fed’s Beige Book Notes Slowing Economic Growth In Some Districts

A majority of the twelve Federal Reserve districts have recently experienced slight or modest economic growth, according to the central bank’s Beige Book.

The Beige Book, a compilation of anecdotal evidence on economic conditions in each of the twelve Fed districts, said four districts explicitly noted that the pace of growth had slowed since the prior period.

The slower growth comes as retail contacts noted some softening as consumers faced higher prices, and residential real estate contacts observed weakness as buyers faced high prices and rising interest rates.

“Contacts tended to cite labor market difficulties as their greatest challenge, followed by supply chain disruptions,” the Beige Book said.

The report added, “Rising interest rates, general inflation, the Russian invasion of Ukraine, and disruptions from COVID-19 cases (especially in the Northeast) round out the key concerns impacting household and business plans.”

The Fed said most districts reported modest or moderate job growth in a labor market that all districts described as tight.

Most of the coastal districts noted hiring freezes or other signs that market tightness had begun to ease, although worker shortages continued to force many firms to operate below capacity.

On the inflation front, most districts noted that their contacts continued to report strong or robust price increases, especially for input prices.

While about half of the districts observed that many contacts maintained pricing power, more than half of the districts cited some customer pushback.

Looking ahead, eight districts said expectations of future growth among their contacts had diminished, while contacts in three districts specifically expressed concerns about a recession.

The release of the Beige Book comes two weeks before the Fed’s next monetary policy meeting on June 14-15, when the central bank is widely expected to raise interest rates by another 50 basis points.

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