Beige Book
For use at 2:00 PM EDT
Wednesday
April 14, 2021
The Beige Book
Summary of Commentary on Current Economic Conditions
By Federal Reserve District
April 2021
Federal Reserve Districts
Minneapolis
Boston
Chicago
New York
Cleveland
Philadelphia
San Francisco
Kansas City
St. Louis
Richmond
Atlanta
Dallas
Alaska and Hawaii
are part of the
San Francisco District.
The System serves commonwealths and territories as follows: the New York Bank serves the
Commonwealth of Puerto Rico and the U.S. Virgin Islands; the San Francisco Bank serves
American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands.
This report was prepared at the Federal Reserve Bank of Dallas based on information collected on or
before April 5, 2021. This document summarizes comments received from contacts outside the Feder‐
al Reserve System and is not a commentary on the views of Federal Reserve officials.
National Summary
Boston
1
A-1
The Beige Book is a Federal Reserve System publication about current
economic conditions across the 12 Federal Reserve Districts. It characterizes regional economic conditions and prospects based on a variety
of mostly qualitative information, gathered directly from each District’s
sources. Reports are published eight times per year.
B-1
What is the purpose of the Beige Book?
First District
New York
Second District
Philadelphia
C-1
Third District
Cleveland
D-1
Fourth District
Richmond
E-1
Fifth District
Atlanta
F-1
Sixth District
Chicago
G-1
Seventh District
St. Louis
H-1
Eighth District
Minneapolis
I-1
Ninth District
Kansas City
J-1
Tenth District
Dallas
K-1
Eleventh District
San Francisco
Twelfth District
What is the Beige Book?
L-1
The Beige Book is intended to characterize the change in economic
conditions since the last report. Outreach for the Beige Book is one of
many ways the Federal Reserve System engages with businesses and
other organizations about economic developments in their communities. Because this information is collected from a wide range of contacts through a variety of formal and informal methods, the Beige Book
can complement other forms of regional information gathering. The
Beige Book is not a commentary on the views of Federal Reserve
officials.
How is the information collected?
Each Federal Reserve Bank gathers information on current economic
conditions in its District through reports from Bank and Branch directors, plus interviews and online questionnaires completed by businesses, community organizations, economists, market experts, and other
sources. Contacts are not selected at random; rather, Banks strive to
curate a diverse set of sources that can provide accurate and objective
information about a broad range of economic activities. The Beige
Book serves as a regular summary of this information for the public.
How is the information used?
The information from contacts supplements the data and analysis used
by Federal Reserve economists and staff to assess economic conditions in the Federal Reserve Districts. The qualitative nature of the
Beige Book creates an opportunity to characterize dynamics and identify emerging trends in the economy that may not be readily apparent in
the available economic data. This information enables comparison of
economic conditions in different parts of the country, which can be
helpful for assessing the outlook for the national economy.
The Beige Book does not have the type of information I’m looking
for. What other information is available?
The Federal Reserve System conducts a wide array of recurring surveys of businesses, households, and community organizations. A list of
statistical releases compiled by the Federal Reserve Board is available
here, links to each of the Federal Reserve Banks are available here,
and a summary of the System’s community outreach is available here.
In addition, Fed Listens events have been held around the country to
hear about how monetary policy affects peoples’ daily lives and livelihoods. The System also relies on a variety of advisory councils—
whose members are drawn from a wide array of businesses, non-profit
organizations, and community groups—to hear diverse perspectives on
the economy in carrying out its responsibilities.
National Summary
The Beige Book ■ April 2021
Overall Economic Activity
National economic activity accelerated to a moderate pace from late February to early April. Consumer spending
strengthened. Reports on tourism were more upbeat, bolstered by a pickup in demand for leisure activities and travel
which contacts attributed to spring break, an easing of pandemic-related restrictions, increased vaccinations, and recent stimulus payments among other factors. Auto sales grew, even as new-vehicle inventories remained constrained
by microchip shortages. The picture in nonfinancial services generally improved, partly supported by strengthening
demand for transportation, professional and business, and leisure and hospitality services. Despite widespread supply
chain disruptions, manufacturing activity expanded further with half the Districts citing robust growth. Bankers in most
reporting Districts saw modest to moderate increases in overall loan volumes. Sustained high demand and tight supply
of single-family homes further pushed up prices, and builders noted ongoing production challenges, including rising
costs. Reports on commercial real estate and construction varied, with activity in the hotel, office, and retail segments
generally remaining weak. Agricultural conditions were mostly stable over the reporting period. Activity in the energy
sector was mixed; coal production fell, while oil and gas drilling was flat to up. Outlooks were more optimistic than in
the previous report, boosted in part by an acceleration in COVID-19 vaccinations.
Employment and Wages
Employment growth picked up over the reporting period, with most Districts noting modest to moderate increases in
headcounts. The pace of job growth varied by industry but was generally strongest in manufacturing, construction, and
leisure and hospitality. Hiring remained a widespread challenge, particularly for low-wage or hourly workers, restraining
job growth in some cases. Commercial and delivery drivers were specifically cited as in short supply, as were specialty
and skilled tradespeople. Some firms noted absenteeism due to COVID-19 was down. Employment expectations were
generally bullish. Wage growth accelerated slightly overall, with more significant wage pressures in industries like manufacturing and construction where finding and retaining workers was particularly difficult. Some contacts mentioned
raising starting pay and offering signing bonuses to attract and retain employees.
Prices
Prices accelerated slightly since the last report, with many Districts reporting moderate price increases and some saying prices rose more robustly. Input costs rose across the board, but especially in the manufacturing, construction,
retail, and transportation sectors—specifically, metals, lumber, food, and fuel prices. Cost increases were partly attributed to ongoing supply chain disruptions, temporarily exacerbated in some cases by winter weather events. There
were widespread reports of increased selling prices also, but typically not on pace with rising costs. Contacts generally
expect continued price increases in the near term.
Highlights by Federal Reserve District
Boston
New York
Economic activity in the First District expanded at a
modest to moderate pace in late February and March.
Tourism seemed poised for a summer rebound. Two
firms enacted large layoffs, but otherwise headcounts
were stable or up. The outlook was mostly optimistic, but
several contacts expressed growing concerns about
inflation.
The regional economy grew at a strong pace for the first
time during the pandemic, with growth broad-based
across industries. Hiring picked up and wages continued
to grow moderately. Consumer spending and tourism
picked up noticeably. Input price pressures have intensified, and more businesses are raising their selling prices.
1
National Summary
Philadelphia
St. Louis
Business activity picked up to a moderate pace of growth
during the current Beige Book period. However, severe
myriad supply constraints continued to hamper potential
growth from demand described as “on fire,” and activity
remained below levels attained prior to the pandemic.
Employment ticked up modestly, as wage growth and
prices continued at modest and moderate paces, respectively.
Reports from contacts indicate that economic conditions
have been moderately improved since our previous
report. Many contacts cited faster-than-expected pace of
vaccinations for stronger-than-expected activity and an
improving outlook.
Minneapolis
The District economy grew moderately, with signs of
acceleration. Job openings and employment rose, but
unemployed workers faced obstacles in job searches.
Construction showed renewed signs of growth, manufacturing continued to increase, and higher commodity
prices benefited farmers. Despite improved oil prices,
drilling remained subdued. Minority-owned firms reported
more financial instability than firms overall.
Cleveland
The District’s expansion accelerated with a new round of
government stimulus and more widely available vaccines. There were even signs of improvement in the hard
-hit accommodation and food services sector. Supply
chain disruptions spread, however, limiting growth and
putting upward pressure on input costs. Looking forward,
firms expect the economy to grow robustly in 2021 as
supply chain constraints ease later in the year.
Kansas City
Economic activity expanded moderately in March, and
contacts were optimistic about growth in the coming
months. Consumer spending rose moderately as retail,
restaurant, auto, and tourism sales increased. Activity
also expanded moderately in the manufacturing, professional and high-tech services, wholesale trade, transportation, residential real estate, and energy sectors.
Richmond
The regional economy grew moderately in recent weeks.
Production increased strongly and importing picked up,
leading to high volumes for ports and trucking companies. Consumer spending also picked up. Both manufacturers and retailers faced delays and shortages of raw
materials and finished goods. Employment increased
and firms looked to fill open positions. On balance, prices rose moderately.
Dallas
The District economy accelerated and was boosted by
strong growth in manufacturing, retail, and nonfinancial
services. Activity in the housing market remained robust,
and energy activity rose further. Supply chain disruptions
led to marked increases in goods prices. Outlooks were
more positive and less uncertain than in the previous
reporting period.
Atlanta
Economic activity expanded at a modest pace. Labor
market conditions improved. Some nonlabor costs continued to rise. Retail sales increased. Hospitality and
tourism activity strengthened. Residential real estate
activity remained strong and home prices rose. Commercial real estate conditions were mixed. Manufacturing
activity improved. Banking conditions were stable.
San Francisco
Economic activity in the District expanded at a moderate
pace as labor markets conditions improved. Wages and
inflation picked up. Retail sales growth accelerated,
while activity in the services sector rose slightly. Conditions in the manufacturing sectors strengthened modestly. Residential construction continued to be strong. Lending activity grew further but loan refinancing tapered
somewhat.
Chicago
Economic activity increased moderately. Employment,
consumer spending, business spending and manufacturing production increased moderately, while construction
and real estate was flat. Wages and prices rose modestly. Financial conditions were little changed. Prospects for
agriculture income in 2021 improved.
2
Federal Reserve Bank of
Boston
The Beige Book ■ April 2021
Summary of Economic Activity
Economic activity among First District contacts increased at a modest to moderate pace. Retail sales strengthened in
the first quarter at two of three firms, advance travel bookings increased, and sales were either stable or up modestly
among contacts in the manufacturing sector and in software and IT services. On a year-over-year basis, more than half
of manufacturers and two of three retailers saw robust gains, while air travel remained below pre-pandemic levels as did
sales at software and IT services firms and at one retailer. Commercial and residential real estate markets extended
their earlier trends, as industrial properties and single-family homes remained in high demand and short supply, and
year-over-year gains in home sales moderated. Hiring activity was mixed and wage increases were moderate on balance. The outlook was stable or increasingly optimistic but concerns about inflation intensified at several firms.
prices (as did their competitors) to pass along increased
materials costs, and three manufacturers planned to
raise their prices in 2021 in response to cost pressures.
Some cost increases were attributed to logistical issues,
weather-related disruptions, and/or to higher oil prices,
but several contacts also mentioned robust demand as a
factor. Based on a recent surge in advance bookings on
Cape Cod, one contact forecasted that hotel room and
vacation rental rates could reach record levels in the
coming months. Among software and IT contacts prices
were unchanged but margins increased year-over-year
on cost savings from remote work postures.
Employment and Wages
Hiring activity was mixed and wage increases were
moderate. One manufacturer and one travel industry
contact laid off large numbers of workers in recent
months, but otherwise headcounts were either flat or up.
A few manufacturing contacts added significant numbers
of employees in 2020 and modest numbers recently, and
others were trying to hire new workers with little success.
A life sciences manufacturer paused an ambitious hiring
plan for 2021 pending the resolution of regulatory uncertainty. Software & IT contacts were engaged in limited to
modest hiring activity, following a 20 percent increase in
headcounts at one firm in 2020. Hospitality contacts
anticipate seasonal worker shortages this summer due
to limits on visas. Among contacts in software and IT,
manufacturing, and retail, more than half implemented
wage increases for 2021 ranging from 3 to 4 percent,
one held wages fixed, and others did not provide wage
information. One manufacturer raised its minimum wage
to $15 to attract more workers, and two retailers also
boosted pay for low-wage workers to reduce turnover.
Retail and Tourism
Retailers reported strong sales throughout the first quarter of 2021. A furniture retailer experienced a record
setting March, which was attributed to customers accessing stimulus funds, but also faced extended delays
in receiving goods. A clothing retailer said that recent
sales were up 30 percent over their pre-pandemic levels
on the strength of online sales; the same retailer saw a
sharp reduction in post-holiday returns relative to 2020.
A home décor retailer reported steady sales across US
stores throughout the winter months, but added that
sales remained below pre-pandemic levels by low singledigit percentages.
Prices
Reports raised the possibility that inflation could increase
in the coming months. Most manufacturers and one
retailer reported steep input price increases—in the
double digits on a year-over-year basis in most cases—
for goods such as paper and paper pulp, wood, pollock
fish, fabric, foam, plastics, and shipping and transportation services. A furniture retailer had already raised
Travel industry respondents continued to report major
disruptions related to COVID-19 for air travel. The number of airline passengers through Boston remained down
A-1
Federal Reserve Bank of Boston
about 70 percent in February and March compared with
the same months in 2019, and the decline for international flights was estimated at nearly 80 percent. Contacts expected leisure travel to increase in the coming
months as vaccination rates progress, and scheduled
flights are already on the rise. Advance hotel bookings
and short-term rentals for summer stays on Cape Cod
are up dramatically from their typical April levels, and
occupancy rates, hotel room rates, and short-term rental
rates there are on track to break records this summer.
Commercial Real Estate
Commercial real estate conditions in the First District
were mostly unchanged in recent weeks. Industrial vacancy rates remained extremely low and rents increased
further at a strong pace. Investors and users alike sought
to build new warehouses and distribution centers despite
high construction costs. A lender to commercial real
estate faced increased competition from large national
banks on mid-priced deals, as the large banks faced
weak demand for larger commercial real estate loans.
Construction activity in the life sciences sector remained
robust, and extended to the conversion of vacant office
space. Retail leasing was better than expected for smaller urban spaces but remained weak for big box stores
and malls. The office sector continued to struggle with
large quantities of sublease space, and although rents
held mostly steady, contacts expect downward pressure
on rents to increase moving forward. Reportedly, some
landlords were holding office space off the market in
anticipation of stronger demand in late summer, although
office footprints are expected to stay well below prepandemic levels for an extended period. Contacts remained concerned that speculative construction of lab
space at current rates could yield a glut by 2023-2024.
Manufacturing and Related Services
Most contacts said that sales were roughly stable in
recent months, and two reported modest increases. Year
-over-year sales results were mixed, as 5 of 8 contacts
reported robust increases and others saw moderate
declines or flat sales compared with 2020Q1. Firms with
double-digit sales increases from 2020 included a manufacturer of membrane materials that said growth was
strong across all business lines and all regions of the
world, including Europe. Several contacts said that sales
were limited only by their capacity. Firms that posted
over-the-year declines included a drug company that lost
patent protection on a key product, and a toy manufacturer that depends on new entertainment products to
boost sales and so was hit hard by the pandemic.
Residential Real Estate
Extremely low inventory and high demand continued to
characterize the residential real estate market in the First
District through January and February. (Vermont reported changes from January 2020 to January 2021, most
other areas provided changes from February 2020 to
February 2021, and Connecticut provided no data).
Closed sales increased in all reporting areas, but by a
smaller margin than in recent reports. The Rhode Island
contact attributes the slowdown to reduced inventories.
Home inventories were down by double digit percentages for all reporting markets except Boston condos,
where inventory again posted a year-over-year gain.
Some contacts noted that while interest rates increased
slightly in February, the increase so far had not blunted
demand. Prices increased in all reporting areas. Extending a pandemic-related trend, suburban single-family
homes remained the most favored product type. Contacts expected demand to strengthen further moving
forward but they expressed concern that low inventories
would crimp sales and limit affordability for many potential buyers.■
Capital investments were ongoing at most contacts,
although only a few had revised their spending plans
upward in response to strong sales. Several contacts
reported that delays in the delivery of capital goods had
reduced capital expenditures in 2020 and that they
planned to spend more in 2021 as a result.
All contacts were optimistic for 2021 but most had not
changed their forecast in recent months. A frozen fish
manufacturer held a cautious outlook because, despite
exceptionally strong recent sales, the end of the pandemic was seen as a potential damper on demand for
their products. Contacts also expressed concern about
rising inflation over the rest of the year.
Software and Information Technology Services
Most contacts enjoyed steady or improved activity in
recent weeks but also said that demand remained well
below pre-pandemic levels. At two firms, demand for
subscription-based cloud computing services extended
an upward trend. Most contacts were optimistic for the
remainder of 2021. Contacts forecasted that progress in
vaccinations and the return of in-person activities would
boost consumer and business confidence as 2021 unfolds, translating into stronger demand for their products.
For more information about District economic conditions visit:
www.bostonfed.org/regional-economy
A-2
Federal Reserve Bank of
New York
The Beige Book ■ April 2021
Summary of Economic Activity
Economic activity in the Second District has accelerated sharply in the latest reporting period, growing at a strong pace,
despite an upturn in reported COVID cases across the District. Moreover, business contacts have grown increasingly
optimistic about the near-term outlook. The labor market has strengthened, with contacts reporting a pickup in hiring
activity, hiring plans, and wages. Input price pressures have continued to intensify, and more businesses report that
they are raising their selling prices. Consumer spending has strengthened, with retail sales exceeding expectations.
Tourism has continued to strengthen, though it remains well below pre-pandemic levels. Housing markets have generally remained robust, while markets for office and retail space appear to have stabilized at weak levels. Finally, contacts in
the broad finance sector reported modest improvement in conditions, while regional banks reported steady to higher
loan demand and little change in delinquency rates.
Employment and Wages
exceptionally widespread increases reported from contacts in manufacturing, as well as sizable increases in
construction, transportation, retail trade, and leisure &
hospitality. Businesses in most sectors continue to expect widespread hikes in the prices they pay in the
months ahead.
The labor market strengthened moderately in March,
with businesses in most major industry sectors reporting
a pickup in employment. A major New York City employment agency noted that financial sector hiring, though
still subdued, has improved to levels not seen since
before the pandemic. An upstate employment agency
reported that hiring activity has picked up across the
board and that it remains difficult to fill lower-wage jobs.
Selling prices have also continued to accelerate but
more moderately. Still, contacts in the manufacturing and
distribution sectors report widespread increases in their
selling prices and also in their plans to hike prices in the
months ahead.
Hiring plans for the months ahead increased markedly—
particularly in the manufacturing, leisure & hospitality,
and information sectors. Hiring and retaining tech workers has been cited as a particular challenge, due to
competition from major tech firms as well as visa restrictions.
Consumer Spending
Consumer spending has strengthened in recent weeks.
Non-auto retailers reported that both business and foot
traffic have picked up but were still short of normal levels. One retail chain noted that its sales across the District have exceeded plan, though sales at New York City
stores continued to lag. Demand for home goods remained strong and luggage sales have reportedly picked
up, whereas clothing sales have picked up somewhat
but remain weak. Sales in some categories, notably
furniture, have reportedly been constrained by inventory
shortages due to supply chain delays. Retail contacts
remained optimistic about the near-term outlook, but the
uncertainty associated with the long lead time between
ordering and receiving merchandise has been a concern.
Wages have continued to grow moderately, at a similar
rate as in the last report. Wage increases were particularly widespread in the retail, transportation, information,
and construction sectors. Looking ahead, more businesses reported plans to raise wages than at any time
during the pandemic, with the most widespread hikes
expected in the leisure & hospitality, professional &
business services, transportation, and retail trade sectors.
Prices
Firms’ input prices have continued to accelerate, with
B-1
Federal Reserve Bank of New York
New vehicle sales showed signs of picking up noticeably
in March, despite low inventories—a constraint that is
expected to persist for several months, due to various
factors including a shortage of microchips used in new
vehicles. Used auto sales have been somewhat constrained by low inventories. Dealers indicate that credit
availability is not much of an issue.
lean inventories, and strong price appreciation, with
many homes reportedly selling for well above asking
price. Home sales activity in areas around New York City
has strengthened as well, with prices holding steady but
running 5-10 percent ahead of pre-pandemic levels.
Inventory levels remain low but have been stable since
the start of the year.
Consumer confidence among New York State residents
climbed in March to its highest level in a year, led by a
surge in expectations.
New York City’s co-op and condo market has picked up
further since the last report, with apartment sales volume
so far this year surpassing comparable 2020 levels.
However, price trends have been mixed, down nearly 10
percent in Manhattan but edging up to record highs in
the outer boroughs. The inventory of unsold units has
come down but remains somewhat above historical
norms. New York City’s rental market has stabilized,
though rents are still down 15-20 percent from early2020 levels in Manhattan and down 8-10 percent in
Brooklyn and Queens. However, leasing activity has
remained fairly brisk.
Manufacturing and Distribution
Manufacturing activity picked up further in March, expanding at a robust pace. Contacts in wholesale trade
and transportation & warehousing also reported that
activity picked up briskly. Contacts in these sectors
continued to report supply disruptions and delays—
particularly in getting shipments from overseas.
Looking ahead, businesses in all these sectors expressed increasingly widespread optimism about future
business prospects.
Commercial real estate markets have been mixed across
the District. Office markets in New York City and northern New Jersey have continued to soften, but markets
elsewhere across the District have steadied. The market
for retail space has been fairly steady in recent weeks,
though still quite slack, especially in New York City.
Services
Service industry contacts also reported a strong pickup
in growth in the latest reporting period. Contacts in information and professional & business services reported a
brisk pickup in business, while education & health providers noted a moderate pickup. Contacts in the leisure
& hospitality sector noted a significant upturn in activity
for the first time since the onset of the pandemic. Looking to the months ahead, contacts in all these sectors
expressed widespread optimism about business prospects.
New office construction has remained sluggish, but
residential construction has picked up outside New York
City. Contacts in the District’s construction industry remained somewhat negative about current conditions but
have grown increasingly optimistic about the near-term
outlook; the main concerns expressed pertain to costs of
materials and shortages of materials and skilled workers.
Banking and Finance
Tourism has continued to trend up. Leisure air travel
reportedly increased sharply in March, and flight bookings are being made longer in advance. In New York
City, weekend hotel occupancy rates have risen steadily
since the last report, recently surpassing 50 percent,
though nightly room rates are still substantially below pre
-pandemic levels. Future bookings have also expanded.
Some hotels that had previously announced permanent
closures have more recently announced plans to reopen.
Museums and restaurants have also seen a steady
uptrend in business. Most of the rebound in tourism has
been from day-trippers and other domestic visitors,
though tourism from Central and South America has
reportedly increased.
Businesses in the broad finance sector reported modest
improvement in business activity. Small to medium sized
banks in the region reported rising demand for business
loans, as well as commercial and residential mortgages,
but steady demand for consumer loans. Bankers reported unchanged credit standards for all categories, steady
loan spreads, and no change in average deposit rates.
Contacts reported little change in delinquency rates, with
bankers reporting some decrease in lenient policies for
delinquent consumer loan and home mortgage accounts.
■
Real Estate and Construction
Housing markets have strengthened further in the latest
reporting period. Sales markets in upstate New York
have been particularly robust, with brisk sales volume,
For more information about District economic conditions visit:
www.newyorkfed.org/regional‐economy
B-2
Federal Reserve Bank of
Philadelphia
The Beige Book ■ April 2021
Summary of Economic Activity
On balance, business activity in the Third District picked up to a moderate pace of growth during the current Beige Book
period from a more modest pace in the prior period. The share of adults who have received at least one dose of a
COVID-19 vaccine climbed past one-third. With the reduced risk from the coronavirus and the return of spring weather,
contacts expressed sentiments ranging from “hot demand” and “on fire” to “giddy and euphoric.” Still, supply constraints
were noted in nearly every sector, including a tighter labor market, a diminishing inventory of for-sale homes, and severe supply chain disruptions. Thus, activity in most sectors remained below levels observed prior to the onset of the
pandemic. Net employment picked up to a modest pace of growth. Positive wage and price growth trends continued at
modest and moderate paces, respectively. More than 60 percent of the firms expressed positive expectations for continued growth over the next six months – the percentage has broadened further among all firms since the prior period.
Employment and Wages
competing more aggressively for lower-wage workers.
One contact noted a bidding war for housekeepers in
that resort location. Signing bonuses – a common practice in the warehouse sector – were reported by several
contacts in the hospitality sector; for example, one restaurant had begun offering $1,000 if workers stayed for
at least 90 days. Another retail contact reported possibly
raising the firm’s minimum wage to $15.00 an hour sooner than previously planned.
Employment appeared to increase modestly overall – an
uptick from the slight pace of growth in the prior period.
The share of firms reporting employment increases
broadened to one-fifth among nonmanufacturers, while
reported increases remained near one-third among
manufacturing firms. The smaller share of firms that
reported employment decreases fell further for manufacturers and held steady for other firms. Moreover, average hours worked rose again for a still larger share of all
firms.
Prices
On balance, prices continued to rise moderately over the
period. About three-fourths of the manufacturers reported higher prices for factor inputs, but those receiving
higher prices for their own products remained near onethird. Similarly, about one-third of the nonmanufacturers
reported that prices rose for their inputs, but about onefourth noted higher prices received from consumers for
their own goods and services.
Staffing firm contacts reported that demand for new
orders continued to be strong, while hiring and retaining
qualified job candidates remained a challenge. Numerous manufacturing contacts lamented a growing lack of
machinists and other skilled workers. Contacts from
several sectors noted challenges because of a lack of
delivery drivers for trips ranging from commercial longhaul to last-mile deliveries. A homebuilder related that a
landscaper had hired 20 laborers in early February and
none showed up for work.
Ongoing disruptions of the supply chain were cited by
nearly every sector. In addition to the persistent COVIDrelated disruptions to production and logistics, the Texas
freeze and the Suez Canal blockage further contributed
to commodity shortages and price spikes.
Wages continued to rise modestly. The percentage of
nonmanufacturing firms reporting higher wage and benefit costs per employee remained near one-third, while the
share reporting lower wages fell to near zero. Firms are
Nearly three-fourths of the manufacturing contacts reported expectations of paying higher prices over the next
C-1
Federal Reserve Bank of Philadelphia
six months, and half expected to receive higher prices
for their own goods.
home mortgages and home equity lines fell moderately.
Seasonal factors drove credit card volumes down moderately – roughly equal to the pace over the same period
in 2020.
Manufacturing
On average, manufacturing activity continued growing at
a moderate clip. About 40 percent of the firms reported
increases of shipments, and about 50 percent reported
increases in new orders. On net, manufacturing activity
remained below pre-pandemic levels, although some
firms have reported increased demand for their products.
Bankers, accountants, and bankruptcy attorneys continued to report relatively few problems with loans or debt.
Contacts noted that the latest stimulus package had
eased the concerns for many harder-hit businesses.
Contacts noted that some businesses are beginning to
make investment decisions, especially mergers and
acquisitions; however, other firms are still waiting. Some
firms that provide direct services are unsure whether
consumer demand will return to pre-pandemic levels. A
few firms are in “deep financial trouble” and are beginning to explore bankruptcy.
Several contacts described demand as nearing prepandemic levels in much of the world. However, most
contacts continued to note supply chain disruptions from
COVID-19 cases and protocols at plants and ports.
Order backlogs and inventories grew further and delivery
times were reaching record levels.
Real Estate and Construction
Consumer Spending
Homebuilders continued to report moderate growth in
contract signings stemming from very strong demand
across most demographics. Contacts noted that sales
and construction would be higher still, but for continued
myriad supply chain disruptions and a tight labor market.
Contacts noted modest growth of nonauto retail sales
with ongoing incremental gains among retailers and
more of a surge for restaurants as vaccinations and
spring weather combined to release “cooped-up demand.” However, pockets of weaker demand persist,
especially in urban retail neighborhoods that are oriented
toward daytime office workers.
Despite strong demand, existing home sales grew slightly, at best, as the supply of available for-sale homes
continued to shrink. Growth slowed in nearly all local
markets, and several reported declining sales but rising
prices.
Reports from auto dealers suggest that sales may have
grown slightly. As with other sectors, demand is strong,
but a lack of inventory on dealer lots is constraining the
upside on volumes; however, profit margins are stronger.
Analysts reported modest declines in demand for commercial office space – citing negative net absorption and
rising vacancy rates throughout the Greater Philadelphia
region. Rents edged down in the Wilmington and South
Jersey submarkets but edged up in Philadelphia. Many
major office tenants continued to operate remotely.
Meanwhile, accounting contacts noted that some of their
clients (and some of their own firms) have made the
decision to permanently increase remote work. In particular, some smaller nonprofits have gone completely
virtual. ■
Overall, tourism appears to have grown modestly, with
the greatest demand from leisure travelers outside of
urban areas. Contacts describe business and group
travel as still inching back and anticipate several years
before those return to pre-pandemic levels.
Nonfinancial Services
On balance, nonmanufacturing activity appeared to pick
up to a moderate pace of growth following a modest
increase in the prior period. About half of the firms reported increases of sales or revenues; however, most
firms continued to note that output remains below prepandemic levels.
Financial Services
The volume of bank lending rose modestly during the
period (not seasonally adjusted); in the same period in
2020, by contrast, loan volumes grew sharply. Commercial and industrial loans rose sharply this year, but not
nearly as much as the massive surge last year when the
first Paycheck Protection Program loans were issued.
Commercial real estate lending rose modestly, but auto
lending and other consumer loans fell modestly, and
For more information about District economic conditions visit:
www.philadelphiafed.org/research-and-data/regionaleconomy
C-2
Federal Reserve Bank of
Cleveland
The Beige Book ■ April 2021
Summary of Economic Activity
The pace of business activity accelerated in recent weeks, and the pickup appeared widespread across the Fourth
District and by industry segments. Contacts often suggested that additional government stimulus and progress in the
fight against the COVID-19 pandemic were the key factors supporting the recent improvement in current conditions.
Those same factors were cited as leading to a decidedly more optimistic outlook for demand moving forward. The improved outlook likely contributed to an increase in capital spending plans as some firms appeared more willing to move
forward with projects that had been delayed as a result of uncertainty surrounding the pandemic and its effects on demand. More firms also appeared ready to increase staffing, although their plans to do so were often constrained by a
dearth of qualified applicants for open positions. These labor constraints contributed to supply chain disruptions such as
shortages of key inputs and freight and shipping delays. The effects of supply chain constraints included longer lead
times and project delays and higher nonlabor input costs. Many firms reported that they were trying to pass through
these higher costs to their customers, with varying degrees of success.
Employment and Wages
Prices
Staffing levels increased modestly, according to our
contacts, even as firms continued to face a dearth of
available talent. Staffing services firms said that demand
for their services increased further from already strong
levels, with search requests coming from clients in a
wide array of industries. Among these were manufacturers, some of which had been using overtime to keep up
with demand but had recently decided to add more
permanent workers rather than overextend their existing
workforce. Even some firms in the hard-hit energy and
accommodation sectors recently added to their staffs.
Quite often, however, plans to add workers were hampered by the limited availability of qualified applicants to
fill open positions. In some cases, contacts indicated that
they were planning to adopt more technology (in lieu of
more employees) to keep up with demand.
Reports of increases in input costs and selling prices
have grown more frequent in recent weeks. Two-thirds of
our contacts reported that nonlabor input costs increased
in the last two months. This is the highest share to report
an increase in more than two years. As was the case
with wages, the increases were widespread across
industries, with contacts’ suggesting that prices were
rising meaningfully for many materials (such as wood,
steel, plastics, and glass products) and for some services (such as shipping, logistics, and advertising). In
many instances, rising input costs were attributed to
supply chain disruptions that have been rippling through
the economy for several months.
At the same time, about half of our survey respondents
said that selling prices had increased over the prior two
months. This number compares with roughly a third who
reported the same toward the end of 2020. As was the
case with input costs, reports of price increases were
evident in every industry. Some contacts said they increased prices to offset higher costs, in most cases only
partially. But a few acknowledged that strong demand
allowed them to boost margins. Contacts generally expected cost pressures to persist in the near term, with
one suggesting that “the imbalances causing costs to
rise are not likely to be resolved quickly.” However, many
expect supply chain challenges to dissipate later in the
year, and this will ease cost and price pressures.
A little more than 40 percent of our survey respondents
reported that they had raised wages over the past two
months, with the remainder indicating that wages had
not changed. Reports of wage increases spanned a
variety of industries but were particularly prominent in
reports from staffing services firms, construction contacts, manufacturers, and transportation firms. One
staffing services firm, which has been surveying its
employees for five years, noted that in its latest survey
for the first time pay had surpassed the type of work as
the top priority of job seekers.
D-1
Federal Reserve Bank of Cleveland
Consumer Spending
Financial Services
Reports suggest that consumer spending grew significantly toward the end of the reporting period, primarily
supported by recent fiscal stimulus and continued progress in the fight against the pandemic. General merchandisers and apparel retailers said that demand was
up notably in recent weeks, and auto dealers commented that sales remained very strong. Restauranters and
hoteliers reported improvements in leisure activity and
group events, and one hotelier said that although business travel remained weak, there was an uptick in recent
weeks. Contacts were optimistic that consumer spending
will continue to recover in the coming months thanks to
fiscal stimulus, rollback of government-mandated restrictions, and expanded vaccination efforts.
Banking activity increased moderately during the reporting period. Contacts noted that demand for auto loans
and mortgages remained strong, although the recent
uptick in mortgage rates dampened refinancing activity.
While business lending remained relatively soft, multiple
contacts reported an improvement in demand, especially
for commercial real estate loans. Lenders said that delinquency rates for consumer and commercial loans were
still low and that the number of active forbearance agreements continued to drop. Most banks saw growth in core
deposits as households received fiscal stimulus funds.
Looking ahead, bankers were optimistic that loan demand would continue to pick up as COVID-19 restrictions ease and more vaccines are distributed.
Manufacturing
Professional and Business Services
Manufacturing orders increased strongly across a range
of end-user markets. Some firms reported stronger orders from customers who are seeking to replenish inventories. Conversely, aerospace remained depressed but
saw modest gains. As a sign that activity in this sector
might improve, one supplier said it recently received
double the normal number of requests for quotes. Supply
chains continued to be disrupted for many manufacturers, especially for products sourced from abroad. A
number of contacts said that future delays in acquiring
raw materials and intermediate products from foreign
suppliers were likely. On balance, the majority of respondents expected conditions to improve in the coming
months, though difficulty in hiring, rising input and transportation costs, and material shortages tempered expectations for continued growth.
Strong demand persisted for professional and business
services firms as many of their client businesses began
to return to normal operations. The owner of a construction and real estate publication noted that business
optimism had increased significantly, and an increasing
number of firms was willing to put more of a focus on
advertising. Contacts anticipated demand will continue to
grow as the business climate improves and the broader
distribution of vaccines gives firms the confidence to
implement projects and initiatives that had previously
been put on hold.
Freight
Demand for freight services remained strong in recent
weeks as the recovery continued to spread across geographies and sectors. While many freight haulers reported
a need to increase freight capacity, a scarcity of truck
drivers made growth difficult. Looking forward, more than
two-thirds of transportation contacts expected demand to
improve further in coming months even as driver short-
Real Estate and Construction
Demand for residential construction and real estate
remained strong. However, exceptionally lean inventories and elevated materials costs pushed up home prices, a situation which, along with moderately higher mortgage interest rates, has reduced average affordability.
Looking ahead, contacts worried that demand will begin
to diminish if home prices continue to rise.
ages persist.■
Nonresidential construction and real estate activity increased since our last report, although this increase was
uneven across segments. Demand for lightmanufacturing and industrial space remained solid, and
demand for office and retail space, while still weak,
experienced a modest rebound. Contacts attributed the
increase in activity to the loosening of business restrictions and improved consumer confidence. Overall,
contacts were optimistic that demand would increase
further as governments continue to roll back restrictions
and vaccines become more widely distributed.
For more information about District economic conditions visit:
clevelandfed.org/region
D-2
Federal Reserve Bank of
Richmond
The Beige Book ■ April 2021
Summary of Economic Activity
The Fifth District economy grew moderately in recent weeks. Manufacturers experienced robust growth and demand
that often-exceeded production capacity, due in part to labor constraints and shortages and shipping delays of raw
materials. Ports also saw strong increases in shipping volumes, particularly for retail and medical goods. Trucking volumes were little changed at near-record high levels. Retailers reported moderate growth in consumer spending but also
faced shortage and delays receiving inventories. Travel and tourism picked up modestly in recent weeks and vacation
rental bookings were strong. Residential real estate demand remained strong and low inventory levels led to higher
selling prices. Commercial real estate leasing rose modestly, overall, but some firms downsized their office space. Loan
activity grew moderately, lifted by new PPP applications, plus strong deposit growth from stimulus payments. Nonfinancial service demand also picked up moderately, overall. Employment rose modestly as hiring was constrained by challenges filling open positions. Prices rose moderately, on balance. Manufacturers reported sharp increases in both prices
paid and prices received while construction materials were little changed at elevated levels and service sector prices
rose moderately.
erably higher than year-ago levels, particularly for copper, steel, and lumber. Service sector prices rose moderately, on balance. Some legal and professional business
services were able to increase prices in response to
strong demand.
Employment and Wages
Employment increased modestly in recent weeks, with
wide variation across sectors. Several contacts noted
that they had open positions, but difficulties recruiting
workers constrained employment growth. A hotelier said
they were able to hire some front desk workers but had
unfilled cleaning staff positions and little interest from
workers in those jobs. Several firms also reported increased turnover and challenges retaining workers. One
manufacturer said that they needed to hire and train
three workers to retain one. In contrast, a professional
business firm said it was difficult to find engineers and
technical professionals because those workers were
hesitant to change jobs. Wages rose moderately, on
balance. A staffing agency noted that firms seeking
hourly and lower-wage workers were raising wages due
to challenges filling open positions.
Manufacturing
Fifth District manufacturers reported robust growth since
our last report, as both shipments and new orders increased sharply. Producers of furniture and food saw
especially high demand, often exceeding supply. Contacts reported that decreases in COVID cases were
leading to fewer delays from labor constraints. However,
manufacturers saw capacity constraints resulting from
supply side disruptions, particularly lengthening lead
times on imports. Shortages of packaging and raw materials were especially pronounced. Manufacturers also
struggled to ship finished goods amid limited trucking
supply and a shortage of containers for exports. While
input costs were elevated, profits remained strong as
manufacturers were able to pass costs through to customers.
Prices
Overall, prices rose at a moderate rate in recent weeks,
but price growth was uneven across sectors. Manufacturers reported sharp increases in both prices paid and
prices received. In particular, prices for durable goods,
such as autos and home appliances, increased amid
strong demand and low inventories, due in part to the
shortage of microchips. Prices for construction materials
were little changed in recent weeks but remained consid-
Ports and Transportation
Ports continued to see robust growth in shipping volumes in recent weeks. Growth of imports far exceeded
growth of exports. Furniture, retail goods, and medical
E-1
Federal Reserve Bank of Richmond
products drove much of the growth on the import side,
but auto imports weakened somewhat. Agricultural
exports increased, and contacts noted a decrease in the
number of empty containers being exported. Sea ports
struggled with delayed arrivals but reported efficient
processing of goods once they reached shore, as turn
times for loading trucks fell significantly. Air shipments
increased, and a Fifth District airport relied on temporary
workers to handle high cargo volumes.
ry and some were holding lotteries to accept customers.
Home builders experienced delays in and high costs of
materials and appliances. Realtors reported due diligence payment prices are rising.
Commercial real estate leasing grew modestly since our
last report but remained below pre-pandemic levels.
Multifamily saw strong demand and new construction.
Retail conditions were mixed as some businesses
closed, but new ones expressed interest in vacated
spaces. Many office tenants downsized, and office vacancies rose, even as landlords increased concessions.
Businesses continued to ask for short-term extensions
on leases. One contact noted an increased interest in
small office spaces for individuals working remotely who
want to leave home. Demand for industrial real estate
was strong, as rates increased and new construction
continued, both speculative and built to suit.
Fifth District truckers reported that volumes held fairly
steady at near-record highs since our last report. Demand for freight was strong across many industries, as
shipments of home improvement goods and manufacturing inputs remained particularly high. In many cases,
companies were unable to meet demand for freight, as
capacity was constrained by a lack of drivers and delays
in orders of trailers. Contacts expected these constraints
to continue and demand to rise, leading to longer delays
in shipments.
Banking and Finance
Overall, loan activity grew moderately this period and
was attributed to improving sentiment. Respondents
indicated modest growth in business lending, led by a
new round of PPP. Contacts stated that commercial real
estate lending also experienced slight growth. Mortgage
volume remains moderately strong despite rates moving
off of historic lows and the lack of housing inventory.
Deposit growth was strong due to the new round of
stimulus payments. Interest rates on deposits continued
to decline slightly, but respondents noted significant
market pressure to increase loan rates on the long end.
Overall credit quality and delinquencies remained good.
Retail, Travel, and Tourism
Fifth District retailers saw moderate growth in demand
and revenue since our last report. Contacts reported
increased shopper traffic, although some clothing retailers reported that many shoppers did not make purchases. Meanwhile, retailers of food and home goods saw
especially high demand. Retailers reported shipping
delays, shortages, and higher prices for some inventories. Profit margins on both new and used cars increased, as inventories of new cars shrank, which auto
dealers attributed to microchip shortages.
Travel and tourism in the Fifth District grew modestly in
recent weeks. Vacation rentals saw strong bookings and
restaurants had more business, particularly on the
weekends. Beach destinations saw high visitation, and
other outdoor attractions and activities registered strong
demand. Hotel rates remained low, although occupancy
picked up in some areas. In the District of Columbia,
tourism remained low, and some restaurants and hotels
closed, both temporarily and permanently. However,
museum visitation increased and restaurants were
hopeful that warm weather would attract more outdoor
diners.
Nonfinancial Services
Overall, the demand for nonfinancial services rose moderately. Firms in the legal and professional business
services saw increased revenues and demand as some
in-person visits and travel resumed. Life science companies reported steady to increasing business. Demand for
health care services was little changed, overall, as nonCOVID-19 related demand rose to offset the decline in
COVID-19 related care. One health care administrator
saw a return to surgical procedures and huge demand
for physician services but noted a steep decline in the
maternity care unit as births were down almost 10 percent compared to last year. ■
Real Estate and Construction
Demand for homes remained strong in recent weeks,
although some realtors noted a slight decrease in sales,
resulting from shrinking inventories of both new and
existing homes. Prices continued to rise, and days on
the market remained low, with most homes selling in
less than a week and many selling within hours. Builders
limited their number of weekly sales to preserve invento-
For more information about District economic conditions visit:
www.richmondfed.org/research/data_analysis
E-2
Federal Reserve Bank of
Atlanta
The Beige Book ■ April 2021
Summary of Economic Activity
On balance, economic activity in the Sixth District expanded modestly from mid-February through March. Labor market
conditions improved, and wage pressures remained muted. Some nonlabor costs continued to rise, and pricing power
was mixed. Retail sales activity rose, and auto sales increased. Tourism and hospitality activity strengthened as hotels
reopened and capacity limits were eased. Housing demand was steady, but inventories of new and existing homes
remained constrained. Overall, home prices continued to rise. Commercial real estate conditions were mixed. Manufacturing activity was strong and new orders and production levels increased. Conditions at financial institutions were
steady, however loan demand remained slow.
normal merit increases during 2021, with higher
increases in critical and high-demand fields.
Employment and Wages
Sixth District contacts reported improvements in labor
market conditions since the previous report. While the
remote work stance remained in place for many firms,
some began bringing employees back into the office or
were making plans to do so over the coming months as
vaccine accessibility increases. A majority of contacts
anticipate hybrid work models will become the norm for
many office workers, and some firms plan to utilize fulltime remote positions to attract and retain workers for
hard-to-fill positions. Among on-site workers,
absenteeism due to illness was down sharply and some
firms have eliminated pay premiums and leave policies
related to COVID-19. The ability to attract and hire
employees varied considerably among contacts,
depending on the industry. For example, challenges to
fill commercial driver and nursing positions remained.
While firms in the hospitality sector were generally
successful at filling permanent positions, temporary
positions were extremely difficult to fill. Employers noted
that unemployment insurance benefits have made it hard
to attract workers for temporary and low-wage positions.
Some noted that child-care and concerns about COVID19 exposure continued to lessen worker availability as
well.
Prices
Consistent with previous reports, input costs, particularly
for lumber, steel, transportation, and shipping continued
to rise over the reporting period. Some contacts expect a
portion of these increases to diminish as supply chain
constraints ease. Reports on pricing power were
mixed. Industries with strong demand have managed to
pass through most input cost increases, while
others plan to implement price increases over the
coming year as activity returns. The Atlanta Fed’s
Business Inflation Expectations survey showed yearover-year unit costs were relatively unchanged
at 2.2 percent on average in March. Year-ahead
expectations increased to 2.4 percent in March, up from
2.2 percent in February.
Consumer Spending and Tourism
District retailers reported an increase in sales since the
previous report. Some contacts noted that spending by
consumers, driven by increases in tourism, rose above
2019 levels. Automobile dealers noted that auto sales
levels continued to improve, even as production and
inventory levels have been adversely affected by chip
shortages.
Most contacts noted that wage pressures remained
subdued and mostly limited to occupations in short
supply such as nurses, commercial drivers, and
warehouse workers. Despite shortages of low-wage
workers, there seemed to be less talk of raising wages
as compared with reports of late last year. Many expect
District travel and tourism contacts reported a significant
uptick in leisure travel activity since the previous report.
Many hotels fully reopened and reported occupancy
levels in the 80-90% range over the first three weeks in
March. Restaurants and attractions reported a
continuation of COVID-19 capacity limits; however,
F-1
Federal Reserve Bank of Atlanta
demand in some areas of the District exceeded capacity.
Hospitality contacts noted solid bookings for the
remainder of spring and through the summer months
and beyond.
cargo activity. Most transportation contacts expect
continued growth in activity over the next six months.
Banking and Finance
Conditions at District financial institutions were steady.
Banking contacts reported that cash balances continued
to increase as deposits remained elevated, and overall
loan demand weakened. Net interest margins remained
compressed. Financial institutions also continued to add
to their securities portfolios. Loan portfolio balances
remained flat across most portfolios with commercial real
estate balances declining slightly. Increases to loan loss
reserves have slowed as credit quality has not
deteriorated.
Construction and Real Estate
Despite a slight uptick in mortgage interest rates,
housing demand throughout the District remained
steady. Existing home sales continued to increase over
year-earlier levels. Meanwhile, existing home inventory
levels contracted as homes for sale did not keep pace
with demand. As demand for new homes continued to
surge throughout the District, builders noted persistent
challenges with rising material and labor costs. Both
existing and new home prices continued to rise.
Although low interest rates have kept housing
moderately affordable overall, affordability declined in
many markets as prices rose. Mortgages either in
forbearance or in delinquency remained elevated,
especially in tourism-dependent markets like Central and
South Florida, as well as rural areas along the Gulf
Coast.
Energy
Contacts reported that domestic demand for energy
products picked up gradually over the reporting period.
Fuel delivery and carrier capacity remained tight as
trucks worked to clear backlogs resulting from
February’s winter storms and fuel supply issues caused
delivery delays. Renewable generation projects geared
up, especially solar power, biodiesel, and renewable
diesel. Industrial construction contacts noted that craft
workers remained sidelined, waiting for activity to pick
up. Utilities contacts cited continued softness in
commercial and industrial segments, while residential
markets remained elevated. Overall, District energy
contacts noted an improved recovery outlook.
Commercial real estate contacts reported that the sector
remained somewhat hindered by the effects of the
COVID-19 pandemic. Conditions in the retail segment
improved modestly as more stores reopened, and
consumer spending at traditional retail establishments
rose. Multifamily conditions were mixed; however,
leasing activity appeared to pick up in some of the
harder hit areas. Office dynamics struggled across the
District as more space was delivered and absorption was
negative.
Agriculture
Agricultural conditions remained mixed. Abnormally dry
conditions persisted in some areas. On a month-overmonth basis, the March production forecast for Florida's
orange crop was down while the grapefruit production
forecast was unchanged; both forecasts were below last
year's production. The USDA reported year-over-year
prices paid to farmers in February were up for corn,
cotton, soybeans, broilers, and eggs but down for cattle
and milk; rice was unchanged. On a month-over-month
basis, prices increased for corn, cotton, rice, soybeans,
cattle, broilers, and eggs, but decreased for milk.■
Manufacturing
Manufacturing contacts reported a solid increase in
overall business activity since the previous report. New
orders and production levels rose at a robust pace.
Supply delivery times increased significantly due to
challenges in supply chains, while finished inventory
levels grew slightly. Expectations for future production
remained optimistic, with almost two-thirds of contacts
expecting higher levels of production over the next six
months.
Transportation
Transportation activity expanded moderately, on net,
since the previous report. Railroads experienced
considerable growth in intermodal traffic as compared
with year-earlier levels, largely offset by substantial
declines in shipments of grain and farm products,
petroleum and petroleum products, aggregates, and
motor vehicles and parts. Air cargo contacts noted
significant improvements in freight volumes over the
reporting period. District ports saw strong container
For more information about District economic conditions visit:
www.frbatlanta.org/economy‐matters/regional‐economics
F-2
Federal Reserve Bank of
Chicago
The Beige Book ■ April 2021
Summary of Economic Activity
Economic activity in the Seventh District increased moderately in late February and March but remained below its prepandemic level. Contacts expected growth to pick up in the coming months, but most did not anticipate full recovery until
at least the first half of 2022. Employment, consumer spending, business spending and manufacturing production increased moderately, while construction and real estate was flat. Wages and prices rose modestly. Financial conditions
were little changed. Prospects for agriculture income in 2021 improved.
Employment and Wages
costs were up moderately, led by higher shipping rates
and large increases in energy and raw materials prices.
Prices for metals, metal products, and lumber were
noticeably higher. Many manufacturers reported passing
on at least some higher wage and materials costs to
their customers, though one indicated that he could not
raise prices until contracts come up for renewal in the
summer. A construction contact noted that some singlefamily homebuilding contracts are now being written with
allowances for changes in the cost of lumber.
Overall, employment increased moderately over the
reporting period and contacts expected a robust increase
over the next 12 months. Contacts indicated that employee absenteeism due to Covid-19 infections or exposures was minimal. Numerous contacts reported difficulty finding workers, particularly at the entry level. Some
said that hiring challenges were greater than prior to the
pandemic. Manufacturers indicated that turnover of new
temporary workers was elevated, with some never showing up for work. Employers, temp agencies, and workforce development organizations pointed to a number of
factors limiting labor supply, including health safety
concerns, childcare challenges, cutbacks in public transportation schedules, job search fatigue, and financial
support from the government. Overall, wages and benefit
costs increased modestly, though multiple contacts in
manufacturing noted strong wage pressures, particularly
at the entry level.
Consumer Spending
Consumer spending increased moderately over the
reporting period. Contacts said that looser pandemicrelated restrictions and stimulus checks from the American Rescue Plan helped support activity. Demand for
leisure and hospitality services, most notably air travel
and restaurants, was noticeably stronger. Nonauto retail
sales increased moderately, with high levels of demand
for groceries, appliances, furniture, electronics, home
furnishings, and jewelry. E-commerce spending continued to be robust. New and used vehicle sales increased
at solid rates despite low inventories in both markets,
leading to increased profits for some dealers. Spending
on vehicle services and parts rebounded to normal levels.
Prices
Prices increased modestly overall in late February and
March, and contacts expected a moderate increase in
prices over the next 12 months. Consumer prices moved
up modestly overall, though there were larger increases
in new and used vehicle prices. Business output prices
generally moved up only modestly even though input
G-1
Federal Reserve Bank of Chicago
Business Spending
constrained by shortages of parts, such as microchips.
Steel production increased moderately, driven by rising
demand from the construction and energy sectors. Demand for heavy machinery increased slightly, led by
growth in agriculture. Specialty metals manufacturers
reported a moderate increase in sales, with growth
spread across a wide range of sectors. Many contacts in
specialty metals said that materials shortages were
resulting in delayed deliveries. Demand for building
materials increased moderately, supported by growth in
new homebuilding and remodeling.
Business spending increased moderately in late February and March. Inventories continued to be lean in many
retail segments due to high demand, and shortfalls in
select categories were expected to persist into the second half of this year. Shortages were particularly notable
in motor vehicles, with some dealers reporting stockouts
of certain popular light truck models and many expressing uncertainty over deliveries from manufacturers. Contacts expected little improvement in the supply situation
over the remainder of 2021. Manufacturing inventories
were slightly below comfortable levels. Contacts continued to report supply chain issues related to raw materials (particularly steel and lumber), microchips, specialty
parts, and appliances to outfit new construction. Some
contacts reported that shipping bottlenecks, made worse
by the Suez Canal closure, were delaying deliveries.
Capital expenditures were up moderately, and contacts
expected a moderate increase over the next twelve
months. There was a small increase in commercial energy consumption, helped by greater demand from restaurants, but little change in industrial energy consumption.
One contact noted that higher natural gas prices resulted
in greater usage of coal for electricity generation.
Banking and Finance
Financial conditions were little changed on balance over
the reporting period. Participants in the equity and bond
markets reported a small improvement in conditions,
though volatility remained elevated. Business loan demand increased slightly, led by growth from manufacturing and healthcare. Contacts reported continued aggressive pricing of financial products and that lending standards loosened slightly. Business loan quality improved
slightly on balance, though there were declines in the
hospitality sector. In consumer markets, loan demand
was little changed overall and across most sectors.
Residential mortgage activity was solid, though refinancing slowed. Contacts reported a decrease in consumer
loan balances following the latest round of stimulus
payments. Consumer loan quality increased slightly,
while standards loosened slightly.
Construction and Real Estate
On the whole, construction and real estate demand was
flat over the reporting period. Residential construction
increased somewhat, led by a rise in home remodeling
activity. Residential real estate activity increased slightly.
Although demand was at a strong level, very tight inventories were slowing the pace of sales, especially for
starter homes. Home prices increased moderately, while
rents increased slightly. Nonresidential construction fell
marginally, led by a decline in the office segment. One
contact noted an increase in backlogs because developers had to pause building while they obtained additional
financing to cover rising construction costs. In commercial real estate, sales, prices, and vacancy rates all were
relatively unchanged. Demand for industrial properties
remained high while demand for office and retail properties remained low. Contacts noted that, as rental deferrals expired, a growing number of retailers were signing
contracts where rent is specified as a percentage of
sales. In addition, there were reports that contracts were
either being written for shorter periods or with gradual
rent increases over the life of the lease.
Agriculture
Prospects for agriculture income in 2021 improved as
many agricultural prices rose and more federal support
was announced. Corn and soybean prices moved higher
during the reporting period, while wheat prices lagged.
Dry conditions in much of the District set the stage for a
fast planting season, with some types of planting already
having begun. Cattle, egg, hog, and dairy prices increased during late February and March. While higher
feed costs hurt livestock producers, the outlook for profits was still good. Farm equipment sales continued to be
strong, and farmland values again rose. ■
Manufacturing
Manufacturing production increased moderately in late
February and March. Some manufacturers reported that
business was above pre-pandemic levels. Auto output
declined slightly as some assemblers and suppliers were
For more information about District economic conditions visit:
chicagofed.org/cfsbc
G-2
Summary of Economic Activity
-
-
-
-
Employment and Wages
—
—
-
-
Consumer Spending
Prices
H-1
-
Manufacturing
Banking and Finance
-
Nonfinancial Services
-
-
Agriculture and Natural Resources
-
-
Real Estate and Construction
H-2
Federal Reserve Bank of
Minneapolis
The Beige Book ■ April 2021
Summary of Economic Activity
Economic activity in the Ninth District increased moderately since mid-February, with signs of accelerating growth.
Employment saw notable gains, with rising labor demand but continued gaps in job matching. Wage pressures were
modest but appeared to be rising, and price pressures were moderate. Sources reported growth in consumer spending,
commercial and residential construction and real estate, manufacturing, energy, and agriculture. Conditions for minorityowned businesses trailed those of similar firms.
Employment and Wages
in hopes of a surge of newly vaccinated job seekers.
“Why start raising wages when a lot of labor might be
coming back?”
Employment saw strong growth since the last report but
remained below pre-pandemic levels. Job postings
increased steadily across the District through mid-March.
Staffing firms reported higher job orders in recent weeks
and expected that trend to continue. These firms also
reported modestly rising unfilled job orders and were
themselves hiring more recruiters. Construction, health
care, and manufacturing firms reported moderate to
strong labor demand, and hospitality and tourism firms
also reported hiring despite recent difficulties in those
sectors. Staffing expectations for the coming months
were widely higher in most sectors, though labor
availability was a widespread concern. Numerous
contacts reported concern over the potential labordampening effects of renewed enhanced unemployment
insurance benefits. A Wisconsin staffing firm reported
many job applicants but few taking the next step to
interviews. Initial unemployment claims in March
continued a downward trend but were still more than
twice the level of similar, pre-pandemic periods.
Worker Experience
Contacts reported a continued disconnect between job
opportunities and labor supply and a contrast between
rural and urban labor markets. Job training
professionals, particularly in Minneapolis-St. Paul,
expressed their need to know more about the skill sets
employers are seeking. Other contacts indicated that
training programs and other services don’t always meet
the needs of low-earning workers, particularly for those
with limited English and computer skills. Hospitality and
janitorial workers reported that transportation, schedule
changes, online learning, relocation, and COVID-19
exposure continued to hamper employment. Several
contacts noted that a great number of frontline workers
affected by this dynamic were people of color, some of
whom don’t qualify for public benefits because of their
immigration status. A labor contact suggested that some
of the automation undertaken during the pandemic was
likely to be permanent and emphasized the need for
efficient paths to train workers for manufacturing jobs.
Wage pressures were modest overall but rising. For
most firms, wages have been rising by less than 3
percent annually. Greater pressure was reported by
manufacturing and construction firms. Multiple contacts
mentioned growing prevalence of sign-on bonuses,
which helped attract candidates without raising long-term
salary commitments. Several workforce contacts
suggested that employers might be delaying wage hikes
Prices
Price pressures remained moderate since the previous
report. Preliminary responses to a survey of District
businesses indicated a substantial increase in nonlabor
input costs in the first quarter of 2021 from a year earlier.
I-1
Federal Reserve Bank of Minneapolis
However, most of those firms reported only slight
increases in prices charged to customers; expectations
for prices over the second quarter were similar. Retail
fuel prices in District states continued to increase briskly
over the reporting period. Prices received by farmers
increased in February from a year earlier for corn,
soybeans, wheat, hay, hogs, turkeys, chickens, and
eggs, while prices for potatoes, dry beans, milk, and
cattle decreased.
Manufacturing
District manufacturing activity increased moderately
since the previous report. A March index of regional
manufacturing conditions indicated expansion in activity
in Minnesota, North Dakota, and South Dakota from a
month earlier. Heavy equipment producers reported
strong demand and long delivery lead times due to
ongoing strength in construction and improvement in
agriculture. Producers of construction materials
continued to report strong demand, especially from
residential building; a maker of ready-mix concrete said
that recent sales were up 40 percent from a year ago.
Consumer Spending
Consumer spending rose moderately, with signs of
growing confidence, likely helped by recent federal
stimulus. Hospitality firms reported difficult conditions
across the District through February. However, many
were seeing improved sales in recent weeks as weather
improved and traffic increased among vaccinated
customers. The lifting of operating restrictions in
Minnesota also helped boost foot traffic there, though
sentiment was more cautious in Minneapolis-St. Paul. A
regional shopping center said that activity was still well
below pre-pandemic levels but saw steady increases in
traffic and spending in March. Ski resorts reported strong
activity, and vehicle dealers reported healthy demand,
with sales limited in some cases by low inventory. Airport
passenger levels in mid-March were roughly 50 percent
higher than early February levels, and regional airports
reported that new flights were being added.
Agriculture, Energy, and Natural Resources
Agricultural conditions improved briskly heading into
spring planting, as prices for many commodities
continued to increase well above their recent levels.
Despite some recovery in crude oil prices, drilling activity
in the Bakken area increased only slightly compared with
the previous report. Industry contacts said that
maintenance and service activity on wells had increased,
but oilfield employment was still down dramatically from
its pre-pandemic level. Iron ore mines continued to
operate at capacity since the previous report, while
contacts in nonferrous mining reported steady to slightly
increased demand.
Minority- and Women-Owned Business Enterprises
Minority- and women-owned business enterprises
(MWBEs) continued to report more widespread
decreases in revenue than other businesses in
comparable industries. However, an economic
development contact reported greater success
accessing more recent rounds of federal pandemic relief
aid among these firms due to longer application
deadlines and more clarity about the programs. Minorityowned firms in the hospitality and tourism industry have
been more negatively impacted than other firms in these
sectors, according to a March survey. Revenue losses
have been greater on average, and there was more
financial instability among these firms compared with
firms overall. In contrast, women-owned firms in these
sectors reported slightly better overall revenue trends,
financial stability, and outlook than non-MWBE firms. A
community-based organization that works with minorityowned businesses indicated that a large number of their
clients have seen net losses of up to 60 percent since
the beginning of the pandemic. ■
Construction and Real Estate
Commercial construction activity grew modestly overall,
with signs of increased optimism. Total active major
construction projects as of mid-March remained below
year-ago levels. Contacts in the Dakotas and Montana
reported stronger activity than those in Minnesota.
However, firms across the District noted a moderate
upturn in projects out for bid, particularly in MinneapolisSt. Paul. Project cancellations and delays also improved.
Residential construction continued to grow moderately,
with permit increases in most of the District’s larger
markets compared with last year. Supply chains and
rising input costs were major concerns for the entire
sector, and material delivery lead times were rising.
Commercial real estate improved slightly as some firms
looked to move workers back to the office and consumer
foot traffic also rose. But virtually all categories faced
occupancy challenges, save for industrial space, which
has experienced growth and relative stability. Residential
real estate continued to see strong home sales across
the District despite very low inventories.
I-2
Federal Reserve Bank of
Kansas City
The Beige Book ■ April 2021
Summary of Economic Activity
Growth in the Tenth District economy accelerated in March, with most sectors expanding at a moderate pace. Consumer
spending increased moderately as retail, restaurant, auto, and tourism sales rose. A quarter of consumer spending contacts reported that the pace of vaccinations had boosted demand, and sales were expected to rise further in the coming
months. Manufacturing activity also expanded moderately, and new orders rose above year-ago levels for both durable
and non-durable goods. Contacts reported moderate gains in wholesale trade, transportation, and professional and hightech sales, with additional gains anticipated in the months ahead. Home prices rose further as inventories declined and
sales increased. Commercial real estate conditions held steady as vacancy rates edged down and absorption rates increased slightly. Energy activity increased moderately, with most District firms reporting higher revenues and profits.
Agricultural conditions remained favorable, supported by strong crop prices. Employment and wages rose at a modest
pace. Input prices continued to rise faster than selling prices, but more than half of firms experiencing price pressures
indicated that they were able to pass through a majority or all of their cost increases onto customers.
than half indicated that they were able to pass a majority
or all of their cost increases through to customers. Overall, input prices increased robustly, while selling prices
rose moderately in both the manufacturing and services
sectors. Contacts expected similar trends in the months
ahead, with slightly faster increases in selling prices.
Construction supply selling prices also increased moderately and were expected to continue at this pace in the
coming months.
Employment and Wages
District employment growth accelerated in March, with
jobs added at a modest pace in both the services and
manufacturing sectors. Recent gains pushed manufacturing employment above year-ago levels, but employment in the services sector remained slightly lower.
Services sector gains were driven by the retail, tourism,
and restaurant sectors, while employment in auto sales
and health services edged down. Despite recent gains,
employment in the tourism, restaurant, and transportation sectors remained moderately below year-ago levels.
Overall, contacts in both the services and manufacturing
sectors expected modest increases in employment in the
coming months.
Consumer Spending
Consumer spending increased moderately in March, with
a quarter of survey contacts indicating that the pace of
vaccinations and the trajectory of the pandemic led to
stronger demand for their product or service. Sales in the
restaurant, retail, and auto sectors increased moderately, and tourism sales were well above their levels earlier
this year. Despite recent gains, tourism and restaurant
sales remained moderately below pre-pandemic levels.
However, retail sales moved modestly above year-ago
levels, and auto sales rose above year-ago levels for the
first time since early last summer. Sales in health services fell moderately and were even with year-ago levels. Contacts across all sectors expected a moderate
rise in sales in the upcoming months.
The majority of contacts reported labor shortages, with
strong demand for truck drivers, information technology
staff, and skilled technicians. Wages rose modestly, and
additional modest gains were anticipated in the months
ahead. The majority of firms indicated that the passage
of the most recent fiscal stimulus package had no effect
on their hiring plans for the rest of 2021.
Prices
Input prices continued to rise at a faster pace than selling prices in both the services and manufacturing sectors, putting additional pressure on profit margins. However, among firms experiencing price pressures, more
Manufacturing and Other Business Activity
Manufacturing activity expanded moderately over the
J-1
Federal Reserve Bank of Kansas City
survey period as both production and new orders rose.
Activity was slightly stronger among non-durable goods
firms, with production rising moderately above year-ago
levels. Durables goods manufacturing also increased,
and although production remained below pre-pandemic
levels, new orders rose above levels from a year ago.
Production and new orders for both durables and nondurables were expected to increase moderately in the
coming months, while capital expenditures were projected to rise modestly. About 20 percent of manufacturing
firms reported that the pace of vaccinations and trajectory of the pandemic had increased product demand, and
a quarter indicated that they had relaxed COVID cautionary measures in the workplace.
loans. Bankers reported a slight increase in consumer,
commercial, and industrial loan demand, while agricultural loan demand decreased slightly. Commercial and
industrial loan interest rates decreased modestly, with
comments indicating a highly competitive market. One
business reported that capital was “extremely available”,
and the terms were the “best that [the company] has
ever experienced.” Overall credit standards held constant, and loan quality improved modestly in comparison
to a year ago. Bankers expected a slight improvement in
loan quality over the next six months. Deposit levels
increased robustly in March, with anecdotal evidence
suggesting stimulus checks led to the large gains.
Energy
District energy activity increased moderately since the
previous survey. Revenues and profits expanded for
most firms, while employment continued to lag year-ago
levels. The number of active oil and natural gas rigs
expanded slightly, mostly due to more active oil rigs in
New Mexico. On average, most District firms reported
needing higher prices for drilling to be profitable for oil,
but lower prices for natural gas to be profitable compared to previous survey periods. Across the District,
financing options and access to credit improved. Most
firms indicated increased regulation (federal, state, or
local) and OPEC production decisions posed the greatest risks to their business over the next year. However,
firms’ expectations for future oil and gas prices remained
higher than in recent survey periods, and more drilling
and business activity was anticipated over the next six
months.
Outside of manufacturing, sales in transportation, wholesale trade, and professional and high-tech services rose
moderately and additional moderate gains were anticipated in the months ahead. Wholesale trade and transportation sales were moderately above year-ago levels,
while sales in professional and high-tech services remained slightly lower. Capital expenditures edged down
in professional and high-tech services but increased
among transportation and wholesale trade firms. In the
coming months, capital expenditures were expected to
increase slightly in transportation but fall slightly in the
wholesale trade and professional and high-tech sectors.
Real Estate and Construction
Residential real estate activity expanded moderately,
and commercial real estate activity held fairly stable.
Home prices rose notably in March as inventories declined moderately and sales increased. These trends
were expected to continue moving into the spring buying
season. Construction supply sales fell modestly but were
expected to rise in the coming months. Vacancy rates for
commercial real estate edged down and prices and
absorption rates increased slightly. Commercial construction activity held steady. However, sales and rents
fell slightly, and contacts noted that developers’ access
to credit had become modestly more difficult. Commercial real estate contacts expected modest increases in
sales, prices, absorption rates, and construction in the
months ahead. Vacancy rates and rents were expected
to remain flat and developers’ access to credit was expected to get modestly more difficult.
Agriculture
Agricultural economic conditions in the Tenth District
remained favorable, but prospects in the cattle industry
were slightly weaker than for other major commodities.
Contacts continued to report that strong crop prices were
supporting a profitable outlook for most producers. However, the price of fertilizers used in crop production increased rapidly in March, and while many farmers likely
had already purchased inputs for the 2021 growing
season, a sustained increase in expenses could reduce
profit margins going forward. In the livestock sector, hog
prices increased sharply in March, while cattle prices
remained stable and below pre-pandemic levels. In
addition to weak price conditions, drought and higher
feeding costs, cattle producers in the southern portion of
the District also were adversely impacted by recent
winter weather events. ■
Banking
Banking contacts reported increased loan demand and
improved loan quality in March, and expectations for the
next six months were increasingly positive. Overall loan
demand increased slightly, driven by modest increases
in the demand for residential and commercial real estate
For more information about District economic conditions visit:
www.KansasCityFed.org/research/regional-research
J-2
Federal Reserve Bank of
Dallas
The Beige Book ■ April 2021
Summary of Economic Activity
The Eleventh District economy accelerated to a solid pace during the reporting period. Growth in the manufacturing,
retail, and nonfinancial services sectors picked up markedly, though activity stayed below normal levels. Home sales
and single-family construction remained vibrant, and apartment demand increased. Overall loan volume rose, supported
by continued strength in real estate lending. Energy activity increased. Employment rose and wages increased moderately. Supply chain disruptions led to longer lead times and intensified upward price pressures in the construction, manufacturing, and retail sectors. Most contacts reported being adversely affected by Winter Storm Uri in mid-February, and
some noted damages to facilities, equipment, and inventories. Outlooks were more optimistic and less uncertain than in
the last report, though there was some trepidation about the impact of supply shortages and/or tighter regulation on
activity.
Employment and Wages
Prices
Payrolls expanded during the reporting period. Solid
hiring continued in manufacturing and residential construction. Service-sector hiring, including retail, picked
up. Contacts in the restaurant industry said staffing was
one of their biggest headwinds in being able to open to
100 percent capacity. Shortages of specialty trades,
such as framers, plumbers, and electricians, persisted in
homebuilding. Reports were mixed in the energy sector,
with exploration and production companies citing flat
employment levels and oil-field services firms noting
some hiring to meet increased demand.
Price pressures intensified during the reporting period.
Input costs rose strongly in the construction, manufacturing, and retail sectors driven in part by supply chain
issues. There were reports of higher prices of fuel,
chemicals, agricultural commodities, lumber, aluminum,
and steel. Selling prices rose at an above-average pace
in most sectors. Exceptions included airline ticket prices,
which remain depressed due to weak demand. Shortages of semiconductor chips slowed new-vehicle production, driving up used-vehicle prices. Homebuilders reported increasing base prices by as much as $10,000
and/or rolling back incentives to offset rapidly rising
costs. Land and lot prices continued to climb as well.
Wage growth was moderate, though there were reports
of significant wage pressure in industries having trouble
finding and retaining workers. One professional and
technical services firm noted that even with signing
bonuses and an increase in starting pay to over $15 per
hour, they were unable to attract qualified entry-level
workers. A manufacturing firm said they were able to
successfully hire for higher-paid professional positions
but filling positions that paid below $20 per hour was
particularly difficult. A restauranteur reported recently
increasing wages by 10-15 percent to attract labor.
Manufacturing
Expansion in the manufacturing sector picked up steam
in March. The acceleration was widespread, and firms
noted that a portion of the rebound reflected catch-up
following the outages caused by the freeze in midFebruary which reduced February revenues on average
by 21 percent. Some manufacturers, however, noted
slower activity due to lingering delays from storm-related
and other supply chain disruptions. In particular, petrochemical production has been slow to come back online,
and contacts expect the ripple effects of these closures
on supply chains to persist into the second half of the
K-1
Federal Reserve Bank of Dallas
year. Refineries said domestic and export fuel demand
was moderate over the past six weeks, drawing down
product inventories during the outages. Outlooks improved markedly, although some contacts voiced concern about the dampening effect of supply constraints,
extended lead times, and increased federal regulation on
activity.
Apartment demand was higher than normal in the first
quarter. Renters continued to favor the suburbs, and
contacts noted slight upward momentum in pricing,
particularly in middle-market product. Monthly rent collections were stable, but renters were paying later than
usual. Industrial construction and leasing activity remained strong. The office and retail markets were still
finding their footing, and the glut of office sublease space
in some markets continued to be a concern.
Retail Sales
Retail sales rose sharply in March after being relatively
flat for four straight months. Auto sales rebounded
strongly as well during the reporting period and demand
for building materials stayed robust. However, a few
firms commented that the lingering effects of the midFebruary winter storms continued to hamper activity.
Supply chain interruptions persisted, causing severe
inventory shortages and driving up costs. Outlooks
turned positive for the first time since yearend 2020,
though materials and parts availability and low inventories were a concern.
Financial Services
Loan demand strengthened, pushing up overall loan
volumes over the past six weeks. Commercial and residential real estate loan volumes expanded strongly,
while consumer lending dipped, and commercial and
industrial lending was flat. Loan pricing remained competitive, and credit standards remained somewhat tight.
Sentiment regarding general business activity improved
significantly, with nearly half of respondents reporting an
increase. Outlooks were optimistic, with contacts expecting a decline in non-performing loans, higher loan demand, and increased general business activity six
months from now. One contact indicated that due to
increased optimism, community banks were engaging in
merger and acquisition activities that were halted in
2020.
Nonfinancial Services
Growth in the nonfinancial services sector surged in
March following subdued activity in the previous reporting period. Accommodation and food services firms cited
very strong activity, particularly during spring break, and
a few restaurant owners said traffic was at or above prepandemic levels. Airlines also cited increased ticket
sales thanks to spring break travel. Leisure travel continued to dominate airline bookings, and contacts noted a
pickup in reservations beyond the spring break period.
Professional and technical services continued to see
robust revenue growth, and staffing firms reported broad
-based increases in demand. In transportation services,
air cargo volumes were down in part due to seasonality,
while shipments coming through the Port of Houston
stayed healthy. Outlooks were boosted by the vaccine
rollout and reopening of the economy, although some
respondents expressed apprehension regarding rising
interest rates and increased regulation.
Energy
Drilling and completion activity rose further during the
reporting period. Oil field services firms noted improved
margin outlooks and a pickup in hiring driven by higher
demand. Exploration and production firms said they
expect continued incremental increases in drilling and
completion activity in the second quarter. While sentiment in the oil and gas industry has notably improved,
contacts remained anxious about the adverse impact of
tighter federal regulations, ample spare capacity, and
worsening COVID statistics in Europe on demand, profitability, and pricing.
Agriculture
Construction and Real Estate
Drought conditions eased somewhat in parts of the
District but intensified in others. Row crop planting was
underway with low soil moisture a concern. Crop prices
remained largely profitable and some pushed higher
over the reporting period, spurring optimism among
producers. While the winter wheat crop did not suffer
much damage from Winter Storm Uri, damage to other
areas of Texas agriculture (citrus, livestock, and vegetables) is estimated to exceed $600 million. ■
Activity in the single-family housing market remained
robust. Sales continued to be characterized as broadbased and solid, with builders noting capping sales and
putting prospective buyers on wait lists. The winter storm
resulted in moderate damage and exacerbated existing
production challenges for builders, including lengthening
building-cycle times and worsening shortages of skilled
labor and materials. Lot supply remained very tight as
did home inventories. Outlooks were favorable, with
continued concern about tight lot supply, labor and material availability and costs, and the recent uptick in mortgage rates.
For more information about District economic conditions visit:
www.dallasfed.org/research/texas
K-2
Federal Reserve Bank of
San Francisco
The Beige Book ■ April 2021
Summary of Economic Activity
Economic activity in the Twelfth District expanded at a moderate pace during the reporting period of mid-February
through March. Employment levels increased moderately, accompanied by higher wages. Inflation picked up, driven
largely by increased material costs and supply chain disruptions. Retail sales growth accelerated, while activity in the
consumer and business services sectors rose slightly. Manufacturing activity continued to expand modestly, and conditions in the agriculture and resources sectors remained generally stable. Contacts reported ongoing strength in residential real estate markets, but largely unchanged conditions in the commercial real estate sector. Lending activity grew
modestly, with some tapering observed in mortgage refinancing activity.
Employment and Wages
tively faster pace. Wages for telework positions were
more stable. A contact in California highlighted more
complex wage structures brought about by a more widely dispersed remote workforce.
Overall employment levels increased moderately, although conditions varied significantly by region and sector. In general, employment has recovered faster in
regions where mobility and commerce restrictions were
lifted sooner. Labor demand remained strong in the
finance, health-care, construction, and professional
services sectors. Employers in hospitality, tourism, and
food services sought to rehire former or furloughed
employees as local restrictions eased over the reporting
period. Employment levels in the entertainment and
education sectors remained subdued. Some contacts
reported facing difficulties in attracting and hiring workers, but many others highlighted an adequate labor
supply. Employers in technology, construction, and
transportation reported being especially constrained by
labor shortages. Some contacts also reported increasing
hours for hourly employees. Conversely, a few contacts
throughout the District in the utilities, manufacturing, and
agricultural sectors mentioned scaling back work hours,
reducing hiring activities, or stipulating hiring freezes.
These cost-cutting decisions were brought about partially
by shortages in input materials, disruptions to supply
chains, and a tightening of capacity constraints.
Prices
Inflation picked up modestly over the reporting period.
Price pressures built up across the region as manufacturers, homebuilders, and providers in health care and in
logistics reported rising costs for material, energy, transportation, and labor. Supply chain disruptions and production bottlenecks played a major role in inflationary
pressures in recent weeks. Many contacts in construction, health care, and retail reported partially passing
these costs onto final prices, while other sectors generally mentioned more stable final prices. Select agricultural
products also saw some price increases, which translated into higher prices at grocers.
Retail Trade and Services
Retail sales accelerated over the reporting period. Contacts highlighted a loosening of business restrictions by
local governments, a national downward trend in new
daily COVID-19 cases until mid- to late March, improving
vaccine distribution, and large government transfer payments which jointly bolstered consumers’ willingness and
ability to spend. Contacts also mentioned pent-up demand and accumulated household savings as additional
factors increasing sales. Appetite for online shopping
continued to grow at a faster pace than for shopping at
brick-and-mortar stores. Home improvement centers and
Wages increased further over the reporting period. Employers in sectors that reported difficulties in attracting
and retaining workers also highlighted tight wage competition, especially for hourly workers. Wages and benefits
for positions in construction, food services, hospitality,
security, and custodial services were boosted at a rela-
L-1
Federal Reserve Bank of San Francisco
specialty retailers reported stable or slightly higher sales
in recent weeks. Retail outlets that depend on tourist
traffic continued to observe only a fraction of prepandemic sales. Contacts also mentioned a number of
supply factors, including logistical delays and misallocation of empty shipping containers at the international
stage which led to insufficient inventories in some retail
categories, including paper goods and cleaning supplies.
A contact familiar with the textile trade mentioned that
inclement weather conditions outside of the Twelfth
District led to impacts on the availability of chemicals and
yarn used in fabric production, thereby affecting sales.
Contacts also mentioned continued concerns about
COVID-related labor shortages. In California, producers
highlighted low water availability as a risk to production.
Demand for timber remained elevated, and higher oil
prices and additional permit issuances bode well for
drillers even though little activity was observed in terms
of new oil wells over the reporting period.
Real Estate and Construction
Residential real estate demand and construction continued to grow at a fast pace. Demand for single family
homes, in particular, remained strong. Nonetheless,
contacts mentioned that the rapid rise in home prices,
the recent rebound in mortgage rates, and continued
tightness of housing inventories have begun to weigh on
home sales growth. Although construction activity has
been strong, homebuilders reported constraints stemming from labor costs, shortages of raw materials, and
lack of available land have exacerbated construction
backlogs across the District. Demand for multifamily
homes was more varied, with suburban locations receiving more inquires and observing higher rents than their
urban counterparts. Contacts raised concerns about
affordability, especially for low- and moderate-income
families.
Activity in the services sector increased slightly. Conditions in food services, tourism, leisure, entertainment,
and hospitality improved marginally following the relaxation of pandemic-related restrictions in some areas, but
overall activity in these sectors remains significantly
subdued relative to pre-pandemic levels. Demand for
transportation services continued to be strong, though
capacity was strained by worldwide logistical complications. Demand for health care rose modestly as capacity
shifted from COVID-19 testing to other services. Demand for technology, legal, and other professional services remained largely stable relative to the prior reporting period.
Conditions in the commercial real estate market remained mostly unchanged. Demand for new office, retail,
and hospitality space remained depressed due to disruptions stemming from the pandemic. Contacts reported
elevated vacancy rates and some softness in commercial space valuations. Demand for warehouse and industrial properties remained strong. One contact in Southern
California noted that commercial space was being converted into warehouses in order to meet this longobserved shift in demand. Another contact reported that
demand for overall commercial space held steady in
Utah.
Manufacturing
Manufacturing activity rose modestly. Demand remained
strong for manufactured metals, food and beverage
products, wood and paper products, computers, electronics, and appliances. Contacts reported widespread
shortages of input materials and parts, such as semiconductors and wood adhesives, which held back production, thereby reducing inventories and postponing sales.
An increase in air traffic and the resolution of aviation
certification issues helped restart demand somewhat for
aircrafts and parts. Capacity utilization rates in metal
fabrication picked up reasonably after a temporary drop
in early March but are still below historical averages for
the sector. A contact in California reported improved
investment conditions for manufacturers in sectors that
proved more resilient to the pandemic, which helped
initiate plans for new plants in some areas.
Financial Institutions
Lending activity grew modestly during the reporting
period. Most banks reported further growth in business
loan originations, mostly due to demand for smaller,
second- round PPP loans. Demand for commercial real
estate loans remained tepid outside of those involving
industrial properties. Growth in residential loan origination was robust but slower than in the previous reporting
period as rising mortgage rates reduced somewhat the
appetite for mortgage refinancing. Banks reported rising
deposits, ample liquidity, and high asset quality. Activity
in the financial markets from professional investors also
drove up demand for private equity and mergers and
acquisitions financing. A contact in Hawaii mentioned
that lending activity related to the tourism sector remained subdued. ■
Agriculture and Resource-Related Industries
Conditions in the agriculture and resources sectors
remained stable overall. Inclement weather negatively
affected some crop yields, but sales of wheat, corn,
raisins, nuts, fruit, and soybeans were generally steady.
Inventories moved down but from relatively high levels
earlier in the year. Growers reported seeing some tapering in demand from abroad on account of an appreciating dollar. Others noted ongoing negative effects of
international supply chain disruptions, which were exacerbated by the temporary closure of the Suez Canal.
L-2
Cite this document
Federal Reserve (2021, April 27). Beige Book. Beige Book, Federal Reserve. https://whenthefedspeaks.com/doc/beige_book_20210428
@misc{wtfs_beige_book_20210428,
author = {Federal Reserve},
title = {Beige Book},
year = {2021},
month = {Apr},
howpublished = {Beige Book, Federal Reserve},
url = {https://whenthefedspeaks.com/doc/beige_book_20210428},
note = {Retrieved via When the Fed Speaks corpus}
}