All twelve of the Federal Reserve’s district offices are reporting modest, if somewhat slowed growth late this spring. At the same time, a solid majority of those districts are seeing a significant increase in goods and services activity.
These are the findings of the latest Beige Book, a summation of current economic conditions published by the Federal Reserve eight times a year.
In a summary of activity at all the Federal Reserve’s districts, the publication said that survey respondents “tended to cite labor market difficulties as their greatest challenges, followed by supply side disruptions.”
Continued the Beige Book: “Rising interest rates, general inflation, the Russian invasion of Ukraine, and disruptions from Covid 19 cases (especially in the Northeast) round out key concerns impacting household and business plans.”
On the labor front, most of the Fed’s districts reports that “worker shortages continued to force many firms to operate below capacity. In response, firms continued to deploy automation, offer great job flexibility, and raise wages.”
Reports of construction activity in the Kansas City-based District 10, which includes Colorado and northern New Mexico, showed a robust increase in non-residential construction, with expectations for future growth on the upside and backlogs “widespread and longer than seen in recent history.”
The housing market appears to have softened somewhat in District 11, based in Dallas, and including Texas and southern New Mexico.
“The slowing was particularly pronounced at the entry price level, though rising rates were beginning to hit the move-up market as well,” said District 11 contacts. “Builders said cancellations were up, traffic was disappointing, conversions were taking longer, and waitlists were shrinking.”
Increased prices have also shown themselves to be a factor in construction projects throughout the San Francisco-based 12th District, which takes in all of Arizona.
“Demand for existing and new single-family homes, while still strong, has slowed down somewhat as higher prices, rising mortgage rates, and low inventories thwarted some potential buyers, especially those at the entry level,” said the summary of conditions for this district.
By Garry Boulard
