Beige Book
For use at 2:00 PM EST
Wednesday
December 1, 2021
The Beige Book
Summary of Commentary on Current Economic Conditions
By Federal Reserve District
November 2021
Federal Reserve Districts
Minneapolis
Boston
New York
Chicago
San Francisco
Kansas City
Dallas
Alaska and Hawaii
are part of the
San Francisco District.
Cleveland
St. Louis
Philadelphia
Richmond
Atlanta
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 Chicago based on information collected on
or before November 19, 2021. This document summarizes comments received from contacts outside
the Federal Reserve System and is not a commentary on the views of Federal Reserve officials.
National Summary
Boston
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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.
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What is the purpose of the Beige Book?
First District
New York
Second District
Philadelphia
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Third District
Cleveland
D-1
Fourth District
Richmond
E-1
Fifth District
Atlanta
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Sixth District
Chicago
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Seventh District
St. Louis
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Eighth District
Minneapolis
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Ninth District
Kansas City
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Tenth District
Dallas
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Eleventh District
San Francisco
Twelfth District
What is the Beige Book?
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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 ■ November 2021
Overall Economic Activity
Economic activity grew at a modest to moderate pace in most Federal Reserve Districts during October and early
November. Several Districts noted that despite strong demand, growth was constrained by supply chain disruptions
and labor shortages. Consumer spending increased modestly; low inventories held back sales of some items, notably
light vehicles. Leisure and hospitality activity picked up in most Districts as the spread of the Delta variant ebbed in
many areas. Construction activity generally increased but was held back by scarce materials and labor. Nonresidential
real estate activity increased widely, while residential real estate activity grew in some Districts but declined in others.
Manufacturing growth was solid across Districts, though materials and labor shortages limited expansion. High freight
volumes continued to strain distribution systems. Energy activity was generally higher, growth in professional and business services varied widely, and demand for education and health services was largely unchanged. Loan demand
increased in almost all Districts, though some reported declines in residential mortgages. Agriculture saw improved
financial conditions overall and rising land values. The outlook for overall activity remained positive in most Districts,
but some noted uncertainty about when supply chain and labor supply challenges would ease.
Employment and Wages
Employment growth ranged from modest to strong across Federal Reserve Districts. Contacts reported robust demand
for labor but persistent difficulty in hiring and retaining employees. Leisure and hospitality and manufacturing contacts
reported an uptick in employment, but many were still limiting operating hours due to a lack of workers. Contacts in
several other sectors also noted labor-related constraints on meeting demand. Childcare, retirements, and COVID
safety concerns were widely cited as sources that limited labor supply. Many Districts noted concerns that the federal
vaccination mandate could exacerbate existing hiring difficulties. Nearly all Districts reported robust wage growth. Hiring struggles and elevated turnover rates led businesses to raise wages and offer other incentives, such as bonuses
and more flexible working arrangements.
Prices
Prices rose at a moderate to robust pace, with price hikes widespread across sectors of the economy. There were
wide-ranging input cost increases stemming from strong demand for raw materials, logistical challenges, and labor
market tightness. But wider availability of some inputs, notably semiconductors and certain steel products, led to easing
of some price pressures. Strong demand generally allowed firms to raise prices with little pushback, though contractual
obligations held back some firms from increasing prices.
Highlights by Federal Reserve District
Boston
New York
Business activity in the First District expanded at a modest pace on balance, but results were mixed. Sales of
single-family homes softened further relative to their
frenzied recent pace. Labor demand was robust but
hiring activity was modest in light of labor scarcity. Price
increases were moderate. The outlook was mostly positive but marked by uncertainty.
The regional economy continued to grow at a modest
pace in recent weeks, restrained by intensifying supply
disruptions and labor shortages. Employment and wages
increased, and businesses noted ongoing widespread
escalation in both input costs and selling prices. Nevertheless, contacts continued to express optimism about
future business prospects.
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National Summary
Philadelphia
St. Louis
Business activity grew moderately during the current
Beige Book period—faster than the prior period—but
remained below pre-pandemic levels. Vaccination rates
rose slightly, but COVID-19 cases also resumed rising,
while the vaccine mandate hit a wall with some workers.
Overall, employment growth picked up to a moderate
pace, but wage and price growth picked up, and sharply.
Economic conditions have shown modest improvement
since our previous report. Contacts reported continued
difficulties hiring to meet increased consumer demand.
Wage increases and supply chain shortages have led to
price increases across several sectors. The overall
outlook is optimistic due to anticipated strong demand.
Cleveland
The District’s expansion picked up a bit after slowing
during the summer and early fall. Contacts reported that
supply challenges continued to limit sales and output
growth. Labor availability changed little recently, leaving
many firms with open positions and unsatisfied demand.
Ongoing shortages of inputs and labor put further upward pressure on costs, and more firms reported raising
output prices over the past two months.
The District economy saw moderate growth despite
continued challenges related to labor, higher prices, and
supply chains. Prices rose as firms passed higher input
costs to consumers. Employment grew moderately, but
tight labor precluded even stronger gains. Consumer
demand grew, but the spread of the Delta variant slowed
some activity. Ag conditions improved, but drought remained problematic. Minority- and women-owned business enterprises saw mixed activity.
Richmond
Kansas City
The regional economy continued to expand at a modest
rate. Growth continues to be constrained by labor shortages and supply chain issues. Firms faced challenges
filling open positions as well as increased turnover,
leading to wage increases for new and existing workers.
Price growth further intensified recently from an already
elevated rate.
Economic activity continued to grow at a moderate pace.
High expectations for future growth were supported by
significant increases in orders for goods and services in
the future. Several contacts noted that their business is
booked out further than ever previously experienced.
Most contacts attributed the backlogs in their businesses
to both elevated demand and ongoing supply factors.
Amid supply disruptions, desired inventory levels rose.
Minneapolis
Atlanta
Dallas
Economic activity expanded at a moderate pace. Labor
markets remained tight and wage pressures grew.
Nonlabor costs rose. Retail sales strengthened. Domestic leisure travel remained solid. Residential real estate
demand was strong. Commercial real estate conditions
improved. Manufacturing activity was robust. Banking
conditions were stable.
The District economy expanded at a solid pace, though
supply-chain bottlenecks and staffing challenges remained headwinds. Employment gains were robust, and
wage and price growth continued to be highly elevated.
Housing and industrial demand remained solid, and
office leasing ticked up. Outlooks were optimistic but
uncertainty crept higher due to worsening supply-side
constraints.
Chicago
Economic activity increased moderately. Employment
and business spending grew moderately; consumer
spending and manufacturing were up modestly; and
construction and real estate was flat. Wages and prices
increased strongly, while financial conditions improved
slightly. A larger than expected corn and soybean harvest pushed up anticipated 2021 farm income.
San Francisco
Economic activity strengthened moderately over the
reporting period. Employment rose at a moderate pace,
while overall conditions in the labor market remained
tight. Wages and price levels climbed significantly. Retail
sales expanded markedly, while conditions in the agriculture and manufacturing sectors strengthened further.
Lending activity increased modestly, and residential
construction expanded at a brisk pace.
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Federal Reserve Bank of
Boston
The Beige Book ■ November 2021
Summary of Economic Activity
Business activity in the First District expanded at a modest pace on balance, but results were somewhat mixed. Retail
sales softened slightly, while restaurant sales rebounded in September following weakness in August attributed to the
Delta variant surge. Manufacturers saw moderate sales gains in the third quarter, and most staffing firms saw robust
increases in revenues. Sales of single-family homes softened further relative to their frenzied recent pace. Commercial
real estate contacts expected office leasing to pick up in early 2022 as more firms require in-person work, but footprints
are set to fall. Labor demand was robust but hiring activity was modest in light of labor scarcity. Average price increases
were moderate. The outlook was mostly positive, but contacts expressed uncertainty concerning inflation, supply chain
disruptions, and the impact of vaccine mandates on the labor market.
contact said that input price pressures had increased
recently but that his firm had mostly offset them with
efficiency improvements and had raised their own prices
only slightly.
Employment and Wages
Labor markets remained very tight and wage increases
ranged from moderate to very strong. Hiring advanced at
a modest pace on average but increased churn—
attributed in some cases to vaccine mandates—put a
drag on headcounts. Manufacturing contacts managed
to hire some workers despite the tight labor market,
albeit with difficulty, and the inability to hire the desired
number of workers was said to hold back growth at one
firm. One manufacturer used large starting bonuses to
attract workers rather than raising starting salaries, and
others enacted modest pay increases. Labor scarcity led
some restaurants and retail outlets to cut back hours of
operation. Staffing firms’ pay rates increased by moderate to large margins from the second quarter, in part to
keep up with hefty starting wage increases by some
large employers. Also, staffing firms faced increased
competition for recruiters from client firms, putting moderate upward pressure on recruiter salaries.
Retail and Tourism
Retail contacts said that sales remained strong in the
third quarter, but that performance had softened somewhat in comparison with either pre-pandemic or year-ago
levels. Massachusetts tourism and hospitality contacts
reported a rebound in sales in September and October
following COVID-related weakness in August.
A discount and salvaged goods retail chain reported
strong September and October sales that exceeded
those of the same period in 2019 by about 3 percent,
marking a slight decline in performance from its summer
sales numbers. However, sales at the firm’s outlets
along the Canadian border increased modestly as restrictions on cross-border commerce eased. An online
home-furnishings retailer said that recent sales remained
well above pre-pandemic levels but declined relative to
the very strong numbers of fall 2020.
Prices
Information on pricing was relatively scarce but suggested that retail and manufacturing prices increased at a
moderate pace on average. At Massachusetts restaurants, menu prices increased at an above-average pace
that was nonetheless not enough to cover large increases in food, labor, and other costs, leaving profit margins
somewhat lower. Manufacturers enacted slight-tomodest price increases, and complaints about input
prices were surprisingly muted. One manufacturing
Restaurants across Massachusetts experienced higher
recent sales after a late-summer dip in response to
renewed COVID outbreaks and restrictions. Despite
improving for most of 2021, restaurant activity in Boston
remained well below pre-pandemic levels. A contact on
Cape Cod reported a strong fall season for hotels, res-
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Federal Reserve Bank of Boston
taurants, and main-street retail, up from weaker activity
in August that was seen as fallout from a COVID cluster
in July. Large wedding venues on the Cape continued to
bounce back from the pandemic, with advanced bookings currently extending into 2024. Nonetheless, a lack
of conferences and other large group travel has continued to weigh on the recovery.
demand for both leasing and investment, as rents and
property values edged higher. Retail leasing activity was
mixed, and investment in grocery-anchored retail increased moderately. In the office market, leasing volume
was sluggish but improved slightly, and is expected to
pick up further in early 2022 based on recent signals
from tenants. However, the extent to which footprints will
be reduced in any renewed leases remains highly uncertain. Office vacancy rates were flat in most submarkets
but increased slightly in Connecticut. Office rents faced
moderate downward pressure in Rhode Island but fell
mainly through increased concessions rather than cuts in
asking rents; elsewhere rents were roughly flat. Construction activity was stable and mostly limited to the life
sciences sector and warehouse space. Commercial real
estate lending activity slowed slightly, a move attributed
to interest rate uncertainty. Most contacts were optimistic, but the outlook was clouded by uncertainty about
office space demand, inflation, and interest rate movements. With many firms set to return to the office in
January 2022, contacts expected greater clarity to
emerge then about firms’ space requirements.
Manufacturing and Related Services
First District manufacturing contacts reported very strong
sales in the 3rd quarter of 2021, although only three firms
were reached this round. Two firms saw moderate-tostrong increases in revenue from the second quarter,
including one with revenues at an all-time high, and one
had roughly steady sales. Revenue gains reflected increased volume rather than higher prices. One manufacturer posted a year-over-year decline in sales but mainly
because it had seen extraordinary sales in 2020Q3, and
all enjoyed revenues that exceeded their respective prepandemic levels. Nonetheless, labor shortages and
supply chain issues were said to hold back sales in
relation to demand. One owner said that if he could hire
as many workers as he needs to fulfill demand, he could
finally return to his peak sales levels from before the
2007-2009 recession. Capital expenditure plans were
unchanged. The outlook remained very positive on balance, but one contact expressed increased uncertainty
related to ongoing supply chain disruptions.
Residential Real Estate
Home sales slowed in September and October amid
continued low inventory and high prices in New England’s residential real estate markets. New Hampshire
reported changes from October 2020 to October 2021.
All other areas provided changes from September 2020
to September 2021. Connecticut data were unavailable.
Staffing Services
Most staffing firms reached this round saw moderate to
very large increases in revenues in 2021Q3 from the
previous quarter, but one firm reported lower revenues,
citing difficulties in filling manufacturing and light industrial positions. All firms described labor markets as very
tight, especially for entry-level roles, and the share of
direct hires increased relative to temporary positions.
Factors seen as holding back labor supply included
childcare and family care obligations, rising wage demands, and some workers’ reluctance to comply with
vaccine mandates. Contacts also reported increased
attrition in response to vaccine mandates. Most contacts
were optimistic, believing that robust labor demand will
continue to drive strong performance at their businesses,
but one firm was less sanguine in light of its weak recent
results. Contacts held mixed views about the potential
impact of vaccine mandates moving forward, with some
seeing them as a major threat to labor supply and others
expecting only temporary disruptions.
While median sales prices are higher and inventories
lower year-over-year in all reporting areas, both indicators are little changed from the previous report. For
single family homes, closed sales fell by moderate to
large margins, both on a year-over-year basis and compared with late summer results. Condo sales increased
year-over-year in Massachusetts and Boston, representing a substantial acceleration in sales activity from the
previous report. Contacts remarked that many buyers
turned to the condo market after being priced out of the
single-family home market. However, in the remaining
condo markets, sales activity slowed in recent months
and over-the-year. Several contacts remarked on the
overall “cooling” of sales activity relative to the frenzied
demand seen throughout the pandemic but noted that
sales and prices were still historically high. ■
Commercial Real Estate
Commercial real estate markets remained mixed and
fundamentals were mostly unchanged. The life sciences
and industrial sectors continued to enjoy very strong
For more information about District economic conditions visit:
www.bostonfed.org/regional-economy
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Federal Reserve Bank of
New York
The Beige Book ■ November 2021
Summary of Economic Activity
The Second District economy continued to expand at a modest pace, with contacts in most sectors continuing to express optimism about the near-term outlook. Both wages and prices have continued to accelerate, as supply disruptions
and labor shortages have intensified. The job market has remained exceptionally tight, with businesses continuing to
add staff and many looking to hire more workers. Consumer spending was steady, with sales of durable goods continuing to be restrained by severe supply shortages. The home sales market strengthened further, while apartment rental
markets have continued to rebound; office markets have been stable. Both residential and commercial construction
activity increased modestly, despite shortages of materials. Finally, contacts in the broad finance sector noted some
pickup in activity, while regional banks reported some improvement in delinquency rates and higher loan demand from
commercial customers.
Employment and Wages
Prices
Employment has continued to increase modestly, restrained by ongoing labor shortages. Businesses reported widespread ongoing difficulty in both hiring new workers and retaining existing staff, as many employees are
quitting to work for a different company or look for a new
job. A New York City employment agency reported a
marked pickup in job openings, particularly at small to
medium sized firms, but a severe shortage of candidates.
Labor shortages persist across a wide range of occupations but particularly in technology, sales, and human
resources. Among the reasons cited for this shortage are
ongoing COVID concerns, child care, and a reduced
urgency to work due to fiscal support and accumulated
savings.
A large and growing proportion of firms reported escalation in input prices—particularly in the manufacturing,
distribution, and construction sectors. A large majority of
contacts in all sectors continue to anticipate rising input
prices in the months ahead.
Of note, leisure & hospitality businesses reported widespread increases in staffing levels, and firms in the manufacturing and distribution sectors also report fairly strong
hiring. Businesses in most sectors also expect to ramp
up staffing levels in the months ahead.
Consumer spending has been mixed but fairly steady
overall in the latest reporting period. Non-auto retailers
reported steady to modestly higher sales in October and
early November, and they were cautiously optimistic
about the upcoming holiday season. Supply disruptions
have caused scattered stockouts, particularly for furniture. One retail chain noted that New York City stores
have seen some improvement due to the gradual return
of office workers and tourists. While in-store business
has remained well below normal levels, strong on-line
sales in the metro area have boosted total business
above pre-pandemic levels. Consumer confidence
among New York State residents rebounded strongly in
Hikes in businesses’ selling prices have also grown
increasingly widespread—most notably among manufacturers, wholesalers, retailers, and construction firms.
Retailers reported more widespread price hikes than at
any time in almost a decade. A majority of businesses in
most sectors plan to raise their selling prices in the
months ahead.
Consumer Spending
Wage escalation has been prevalent across all major
industry sectors but particularly widespread among leisure & hospitality firms. An employment agency in upstate New York reported rapid escalation in wages and
benefits, as well as increasing use of perks to attract
workers. Looking ahead, businesses across all major
sectors foresee continued widespread wage hikes.
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Federal Reserve Bank of New York
October, after dropping in September.
somewhat above normal in Manhattan but are at exceptionally low levels across the rest of the District, where they
have continued to restrain sales activity and push up prices. In Manhattan, home prices continued to climb, particularly at the high end of the market, where they now exceed
pre-pandemic levels.
New vehicle sales continued to weaken, mostly due to a
lack of supply but also some drop off in buyer traffic.
Many dealers have little or no inventory and expect this
to continue through at least mid-2022 due to the microchip shortage, as well as general supply chain disruptions. Dealers noted that almost all cars coming off the
production line have already been sold. Sales of used
vehicles have picked up a bit due to a modest increase
in inventory and continued robust demand.
New York City’s residential rental market has strengthened
considerably in recent weeks, particularly in Manhattan
where rents and occupancy rates have rebounded to
around pre-pandemic levels—exceeding them at the higher end of the market but still lagging at the lower end.
Manufacturing and Distribution
Manufacturing and transportation & warehousing firms
saw continued solid growth in recent weeks, while
wholesalers noted a pickup in growth to a brisk pace.
However, many businesses in these sectors complained
that ongoing labor shortages and supply disruptions are
increasingly impeding business. Still, manufacturers and
wholesalers continued to express fairly widespread
optimism about the near-term outlook, while those in
transportation & warehousing were moderately optimistic.
Commercial real estate markets have been steady, on
balance, across the District. In New York City, office rents
and availability rates were little changed in recent weeks,
and leasing activity has picked up. Across the rest of the
District, office vacancy rates edged up in most areas, while
rents were generally steady. The industrial market continued to strengthen, with vacancy rates steady to down
slightly near record lows and rents continuing to escalate.
The retail leasing market has shown scattered signs of a
pickup.
Services
Both multi-family residential and non-residential construction starts were steady, though there continues to be a
good deal of ongoing construction. However, some industry contacts reported that activity slowed further in October,
partly due to normal seasonal effects but also reflecting
worker shortages and problems acquiring construction
materials. Moreover, construction sector contacts have
grown more pessimistic about prospects for the months
ahead. A good deal of new apartment development
(rentals and condos) is currently in the pipeline.
Service industry activity continued to expand at a modest
pace in recent weeks. New York City subway ridership
has increased steadily, though it is still about 40 percent
below comparable 2019 levels. Leisure & hospitality
businesses noted a pickup in growth. Contacts in the
professional & business services and information industries reported more modest growth, while education &
health businesses indicated little change in business.
Service firms generally remained optimistic.
Banking and Finance
Tourism has continued to increase, helped by a series of
events, most notably the New York City marathon.
Weekend hotel occupancy rates have climbed above 80
percent, even as more hotels have re-opened, approaching pre-pandemic levels; mid-week rates have risen but
remain well below normal at 50-60 percent. Increased
occupancy, along with a gradual rebound in room rates,
have boosted revenue. The re-opening of borders is
expected to further buoy New York City’s hospitality and
related sectors, as well as bring some influx of Canadian
visitors, which would benefit parts of upstate New York.
Businesses in the broad finance sector indicated that
activity has picked up modestly and were generally optimistic about the near-term outlook. Small to medium-sized
banks across the District reported stronger demand for
commercial mortgages and commercial & industrial loans
but steady demand from households. Refinancing activity
remained unchanged, on net. Credit standards were reported as unchanged across all categories. Loan spreads
narrowed for consumer and commercial loans, but they
widened for residential mortgages. Delinquency rates
improved across all categories. Finally, bankers reported
some reduction in leniency for consumer and commercial
loan borrowers. ■
Real Estate and Construction
Housing markets have continued to strengthen across
most of the District since the last report. Home sales
activity picked up noticeably across New York City,
reaching its highest level in decades, while the inventory
of unsold homes receded further. Inventory levels remain
For more information about District economic conditions visit:
newyorkfed.org/regional-economy
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Federal Reserve Bank of
Philadelphia
The Beige Book ■ November 2021
Summary of Economic Activity
On balance, business activity in the Third District grew moderately – a faster pace than during the prior Beige Book
period. Still, activity in most sectors had not yet returned to pre-pandemic levels. The rate of all persons being fully
vaccinated against COVID-19 rose to about 64 percent. However, after falling through October, COVID-19 cases are
rising again in November, with the highest incidence rates in rural areas. The earlier ability of large professional firms
imposing vaccine mandates is now being offset by challenges faced at firms in other sectors in which the workforce is
less amenable. There are ongoing reports of supply chain disruptions and labor shortages, both of which have taken a
toll. While net employment growth picked up to a moderate pace, prices and wages have risen sharply. Still, optimism
was more widespread, with nearly three-fourths of the nonmanufacturers and close to one-half of the manufacturers
expressing positive expectations for continued economic growth over the next six months.
Employment and Wages
described vaccination rates of just 40 percent among
their workforces and dire expectations for imposing the
mandate or conducting weekly testing.
Employment grew moderately, with service sectors
providing the lift from the more modest pace of growth
last period. The share of firms reporting employment
increases rose to one-fourth of the nonmanufacturing
firms and held steady at one-third among the manufacturers. Overall, one-third of the nonmanufacturers reported a rise in average hours worked – an increase since
last period that converged with that of manufacturers.
Wages rose substantially. The share of nonmanufacturing firms reporting higher wage and benefit costs per
employee climbed to 60 percent. No firms reported lower
compensation. Contacts reported significant salary increases for many professional jobs and also noted that
job candidates would arrive for interviews with several
offers in hand. Some speculate that remote work may be
creating competition for workers living in outlying areas
between jobs based in their areas and those in New
York City and other high-cost areas. Since the prior
quarter, firms reported a significantly higher expectation
of the one-year-ahead change in compensation cost per
worker, with a median of 5.8 percent.
Contacts noted an uptick in workers returning to the
hospitality sector. However, most staffing firms and other
employers continued to report significant difficulty attracting and retaining labor. Moreover, several contacts noted
that baby boomers were leaving jobs and selling businesses to retire early – a trend that was due (1957
marked the peak year for births among baby boomers;
those babies turn 65 next year) but has accelerated
because of pandemic burnout.
Prices
On balance, prices rose sharply over the period. The
share of manufacturers reporting higher prices for factor
inputs climbed above 80 percent, while those receiving
higher prices for their own products rose to 65 percent.
The share of nonmanufacturers reporting higher prices
for their inputs rose to 66 percent, while the share receiving higher prices from consumers for their own goods
and services exceeded 40 percent.
The vaccine mandate has been met with varying levels
of acceptance across the labor force. Many large employers in professional services, health care, and other
similar sectors have described relatively high cooperation with those mandates, especially in urban areas.
However, other large employers in manufacturing and
retail, including staffing firms that service those sectors,
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Federal Reserve Bank of Philadelphia
From our quarterly survey of firm price expectations,
contacts reported further increases in the actual prices
received for their own goods and services over the past
year – the trimmed mean for actual price changes was
8.6 percent among manufacturers and 4.8 percent for
nonmanufacturers. Actual price changes have risen
steadily since the fourth quarter of 2020, when contacts
reported increases of 1.3 percent and 1.4 percent for
manufacturers and nonmanufacturers, respectively.
consumer loans fell modestly. Auto lending and commercial real estate were relatively flat. Credit card volumes
grew modestly – an improvement over the slight decline
during the same period in 2019.
Looking ahead one year, the prices that firms anticipate
receiving also rose further – the expected rate of growth
was 6.8 percent among manufacturers and 5.9 percent
for nonmanufacturers. However, for manufacturers this
quarter marked the first – since prices began rising significantly – in which the expected future price increase
was lower than the prior year’s change.
Bankers, accountants, and bankruptcy attorneys have
begun to note a small uptick in some delinquencies, but
at very low levels. However, several contacts noted that
homeowners who had faced untenable levels of forbearance debt exited their mortgages by selling without a
foreclosure and renting elsewhere. The significant increase in home prices has enabled a more graceful exit
from debt than during the Great Recession, when many
homeowners were underwater on their mortgages. One
accountant reported that three major clients sold their
multimillion-dollar businesses and retired – citing fatigue
stemming from uncertainty.
Manufacturing
Real Estate and Construction
On average, manufacturing activity grew robustly – an
increase over the prior moderate pace. However, the
strongest net increases were for new orders, while shipments merely edged higher. Not surprisingly, net backlogs and delivery times also rose and were more widespread. Net inventories dipped.
Homebuilders noted little change. Demand remains
strong, but sales are constrained by higher prices and
longer delivery times; construction activity remains busy,
but efficiency is challenged by supply constraints and
contractor availability. One contact noted that the once
critical task of scheduling has now become the critical
task of rescheduling.
Consumer Spending
Existing home sales increased modestly as new listings
improved. Sales continued to feature multiple offers and
cash deals, but inspections were not waived as often. On
average, closing prices remained above asking prices in
many markets.
Retailers (nonauto) and restaurateurs reported modest
growth. Contacts noted that ongoing supply chain disruptions and labor shortages continued to constrain growth.
Auto sales held somewhat steady at low levels, as supply chain issues continued to plague auto dealers. According to contacts, manufacturers are shipping so few
new cars that most are presold and spend little time on
dealer lots. Used cars are also becoming scarce.
Construction activity for nonresidential projects held
steady. According to contacts, industrial/warehouse and
institutional projects remained strong, while multifamily
projects continue to sell despite some concerns. However, the office market is uncertain and quiet. Leasing
activity was also strong for industrial and lab space,
while demand for office space continued to weaken. The
office sublease market stayed active, and many lease
renewals requested less space. ■
Tourism resumed a modest pace of growth as the Delta
variant wave ebbed. Contacts reported that leisure travel
remained relatively robust, while business trips picked up
again, especially among small and medium-sized firms.
Nonfinancial Services
On balance, nonmanufacturing activity grew moderately
– a faster pace than during the prior period. The share of
firms reporting increases in sales rose significantly to
nearly two-thirds.
Financial Services
The volume of bank lending (excluding credit cards)
edged lower during the period (not seasonally adjusted);
during the same period in 2019, by contrast, loan volume
growth was flat. Home mortgages grew modestly; however, commercial and industrial loans continued to contract significantly, while home equity lines and other
For more information about District economic conditions visit:
www.philadelphiafed.org/regional-economy
C-2
Federal Reserve Bank of
Cleveland
The Beige Book ■ November 2021
Summary of Economic Activity
Economic activity in the Fourth District accelerated somewhat in recent weeks after having decelerated over the summer and early fall. While most businesses indicated that demand for their goods and services remained solid, some
suggested that persistent supply-side disruptions (and associated higher costs) led some customers to put off spending
until availability of products improved or costs came down. For example, one auto dealer said that only customers who
need to buy a car are doing so, while others who want one may be sitting on the sidelines. A key factor limiting capacity
was the ongoing labor shortage. A few contacts reported that labor availability improved a little in recent weeks, but they
were clearly in the minority. Moreover, even those who had seen an increase in applicants noted that the increase was
not sufficient to meet their staffing needs. Wages and other input costs continued to rise in recent weeks, and a larger
share of firms reported output price increases. Looking forward, contacts were generally more optimistic about demand
in coming months than they were in the prior report, even as they expected shortages and higher costs to persist.
Employment and Wages
arrangements to attract and retain workers.
Staffing levels continued to trend modestly higher in the
District. Demand for labor was strong across industries,
but a dearth of available workers constrained hiring.
Many firms continued to say that they needed to hire
additional workers to keep up with current demand but
were unable to do so, a situation leading to flat and often
falling staffing levels. Some firms, including retailers,
restaurants, and hotels, curbed hours of service because
of a lack of workers. On balance, contacts said that labor
availability has changed little since our last report, and
they did not expect it to change meaningfully in coming
months. Several firms indicated that they were reluctant
to mandate vaccines because doing so would likely
disadvantage them in an already competitive labor market.
Prices
Nonlabor input costs continued to increase. Eighty percent of contacts reported higher nonlabor input costs
over the prior two months, with the increases broad
based across industries and inputs. As one logistics
contact stated, “Gas, electric, food, raw materials, products, everything is going [up].” With broad-based supply
disruption expected to persist into 2022, most contacts
expected costs to continue rising in coming months. That
said, a few contacts suggested that the availability of
semiconductors, a key constraint in the production of
many goods (including autos), had increased somewhat
over the prior two months.
More firms reported higher selling prices since the last
report. Approximately 65 percent of contacts said they
increased prices over the prior two months, a share that
has changed little over the past four reports. In most
instances, firms suggested that they raised selling prices
out of necessity to keep up with increased input costs.
One restaurant owner said that she was trying to “control
every other aspect [she] can before raising prices.” Several contacts who did not increase prices could not do so
because they were bound by contracts. Some of these
Reports of wage increases were more frequent in recent
weeks amid those persistent hiring challenges. Nearly 70
percent of our contacts reported that wages had risen
over the prior two months, and the increases were broad
based across industries. While wage increases were
most notable for entry-level positions, contacts suggested that pay was increasing across the wage scale. Moreover, firms were reportedly enhancing other benefits
such as hiring and retention bonuses and flexible work
D-1
Federal Reserve Bank of Cleveland
firms plan to include escalation clauses in the future.
es in lead times. Overall, contacts were optimistic that
demand would remain strong. However, a few construction contacts raised concern that the recently signed
infrastructure bill could put further pressure on supply
chains.
Consumer Spending
Reports suggested that consumer spending increased
modestly during the reporting period. General merchandisers and apparel retailers said that demand for goods
remained strong, and they noted solid early holiday
season sales. Hoteliers and restaurateurs reported continued improvement in activity, and one hospitality contact said that weddings and conferences that had been
rescheduled from last year were taking place. Auto dealers reported a dip in sales despite generally strong demand as tight inventories and higher prices deterred
buyers. Contacts expected a favorable holiday shopping
season and were optimistic that nonauto consumer
spending would continue to increase in the coming
months. However, auto dealers suggested that sales will
remain weak until inventory levels recover, with some
expecting supply bottlenecks to begin to ease as early
as next quarter.
Financial Services
Loan demand increased moderately. Contacts reported
some growth in business lending, especially for commercial real estate loans, and many bankers reported a
stronger loan pipeline. Contacts noted that demand for
auto loans and mortgages was stable to slightly down as
higher selling prices and limited inventories in both markets dampened activity. Lenders said that delinquency
rates for consumer and commercial loans were still low
and that core deposits increased. Looking ahead, bankers were optimistic that business lending would continue
to improve as pipelines strengthen.
Professional and Business Services
Contacts in professional and business services reported
that demand remained robust. Firms attributed the
strong demand to the overall health of the economy that
has increased companies’ desire to move forward with
projects and acquisitions. One law firm noted that their
clients’ economic outlook remained optimistic and that
challenges brought on by supply chain disruptions and
labor shortages have been outweighed by favorable
business opportunities. Going forward, demand is expected to remain strong as firms continue to ramp up
business activity and actions from the federal government related to vaccine mandates and the infrastructure
bill further increase the need for compliance and engineering solutions.
Manufacturing
Demand for manufactured goods remained solid, but the
ability to meet that demand was hampered by continued
supply chain disruptions. That said, some contacts reported that they saw increased demand for their products because their competitors were out of stock or had
changed their product offerings. Several manufacturers
noted sustained weakness in demand from auto-related
customers as key inputs to that industry (including semiconductors) remained in short supply. Looking ahead,
contacts were optimistic that activity would remain
strong, and some noted that the passing of the infrastructure bill and an increase in auto production could
boost demand.
Freight
Real Estate and Construction
Demand for freight and logistics services remained
strong. A regional airport relayed that cargo volumes
were up more than 20 percent year over year. Contacts
reported that the availability of drivers remained limited.
More often, equipment shortages also made it difficult to
expand capacity. Because it was difficult to add capacity,
contacts expected that demand in the coming months
would continue to be stronger than the sector’s ability to
meet it. ■
Homebuilders and residential realtors reported that
housing demand remained strong despite persistent
supply chain disruptions that have further increased lead
times for new homes. One homebuilder attributed the
heightened demand to the desire of individuals to lock in
low interest rates. Going forward, contacts anticipated
demand will remain elevated, though homebuilders
expected supply constrains will continue to hinder construction activity.
Demand for nonresidential construction and real estate
continued to rebound. Industrial and retail leasing activity
remained strong, and an increasing number of individuals returning to in-person work further improved demand
for office space. Nonresidential construction contacts
also indicated that demand remained strong, though
persistent supply chain disruptions led to further increas-
For more information about District economic conditions visit:
https://www.clevelandfed.org/en/region/regional-analysis
D-2
Federal Reserve Bank of
Richmond
The Beige Book ■ November 2021
Summary of Economic Activity
The Fifth District economy continued to grow at a modest pace since our previous report. Manufacturing activity picked
up modestly and lead times lengthened but producers struggled to keep up with demand due to supply and labor shortages. Ports and trucking companies saw modest to moderate increases in volumes from already high levels, and they
had difficulty meeting demand due to capacity and labor constraints. Retail demand remained strong and stores continued to report inventory challenges and staffing shortages. Travel and tourism rose moderately, lifted by an increase in
business and group travel. Residential real estate activity softened modestly but remained strong as prices held steady
and homes sold quickly. Inventory remained low but increased slightly. Commercial real estate leasing rose modestly
amid flat to slightly rising rental rates. Financial institutions reported modest loan growth, overall, as commercial real
estate and business lending increased modestly while mortgage lending slowed slightly. On balance, nonfinancial services firms indicated modest growth. Employment rose moderately and demand remained strong. There were widespread reports of difficulty finding and retaining workers at all skill levels, leading to a moderate increase in wages.
Prices increased further in recent weeks and remained elevated on a year-over-year basis.
Employment and Wages
Manufacturing
Total employment in the Fifth District increased moderately in recent weeks and demand for workers remained
robust. Contacts from across sectors of the economy
reported difficulties finding workers at all skill levels.
Many also reported difficulties retaining workers and
faced increased turnover. Several employers expressed
concerns that their current workforce was being overworked. Some contacts had success recruiting young
people into their training and apprenticeship programs
while others were able to find workers more easily for
fully remote positions. Wages continued to rise at a
moderate rate as employers increased pay for both new
and existing workers.
Fifth District manufacturers reported a modest increase
in shipments and new orders in recent weeks. However,
lead times continued to lengthen as inventories remained low. Manufacturers struggled to find shipping for
goods, and production was constrained by shortages of
staff and inputs. A furniture manufacturer reported record
shipments in recent weeks but struggled with machinery
breaking down from overuse. Multiple contacts reported
that long lead times for machinery parts limited production. Manufacturers saw high revenue but reported
shrinking profit margins resulting from increased costs of
materials, high shipping rates, and rising wages.
Prices
Fifth District ports saw moderate growth since our last
report, as some handled record-breaking volumes. Import volumes drove growth, but export volumes rose as
well. Imports of furniture, apparel, and other consumer
goods were especially strong, as were agricultural exports. However, both imports and exports of autos were
weak. Shortages of transportation equipment and warehouse space led imports to dwell at the ports for longer
times, causing congestion. Contacts noted that many
empty containers were being shipped back to Asia,
before they could be loaded with exports as ocean carriers could get higher rates for import cargos.
Ports and Transportation
Price growth intensified slightly in recent weeks from an
already high rate. According to our surveys, average
prices were up nearly five percent compared to last year
in the service sector. Manufacturers reported even
stronger growth in selling prices, above nine percent. In
both sectors, selling prices rose as firms were able to
pass along at least some of their rising costs for raw
materials, intermediate and finished goods, and labor.
Several contacts noted that strong demand, shortages of
inputs, and elevated shipping and transportation costs
contributed to input price growth.
E-1
Federal Reserve Bank of Richmond
Demand for trucking in the Fifth District increased modestly from already high levels in recent weeks. Contacts
reported turning away business because of shortages of
drivers and equipment. Volumes were high across most
goods in both the industrial and retail sectors. Delays in
getting new trucks led to companies to run old ones
longer, leading to increased need for repairs, which, in
turn, were delayed by long lead times for parts. One
contact expected this issue to get worse, reporting that
suppliers are not taking orders for next year because
they are unsure what they will be able to produce.
Commercial real estate leasing in the Fifth District increased modestly in recent weeks. Office leasing improved slightly, but some businesses looked to downsize. Incentives and concessions increased, but rental
rates for office space held steady. Companies saw an
increase in retail leasing, particularly for restaurants and
services, driving rental rates up and vacancies down.
Contacts noted that vacated retail spaces were quickly
occupied by new businesses. Demand for industrial
space remained strong and continued to rise. Multifamily
leasing remained strong, and contacts noted increasing
multifamily construction.
Retail, Travel, and Tourism
Banking and Finance
Demand for retail in the Fifth District held fairly steady at
high levels. Customer traffic was strong, but low inventories limited sales. Inventories of automobiles continued
to shrink, but dealers saw strong profits because of high
prices of vehicles. Retailers ordered goods early to allow
time for inventories to arrive. Some contacts reported
swiching from ocean to air transport for goods from
overseas, which was more costly but helped to replenish
inventories. Many retailers limited operating hours because of staffing shortages, and businesses invested in
automation where possible.
Loan growth was modest, overall, for this period due
mainly to higher than normal credit payoffs. On balance,
banks indicated a slight increase in demand for commercial real estate and business loans, and a slower pace of
mortgage loan growth. Direct auto lending was almost
nonexistent due to a lack of inventory on car dealer lots.
Most financial institutions stated that deposits continued
to grow moderately despite a further reduction in rates
on interest-bearing accounts. Credit quality remained
good, with a few respondents noting that delinquency
rates continue to decline to well below pre-COVID levels.
Travel and tourism in the Fifth District increased moderately since our last report. Contacts reported seeing
more business and group travel than they had since the
beginning of the pandemic, and air travel increased in
many areas. Hotel occupancy and rates strengthened,
but hotels limited the number of rooms offered and
restricted services because of staffing shortages. A
resort reported staggering services and activities offered
throughout the week in order to operate with fewer staff.
Restaurants saw strong demand but limited hours because of lack of staffing and implemented limited menu
choices because of supply chain disruptions.
Nonfinancial Services
Demand and sales for nonfinancial services rose modestly in recent weeks. Firms engaged in mechanical
repair services, such as automobile, elevator, and manufacturing equipment repair saw strong demand. Professional and legal services firms reported steady demand,
overall. Health services providers saw continued demand for both COVID and non-COVID related services.
For example, a behavioral health practice reported increasing demand and continued to provide services
virtually. A North Carolina community college president
noted that while enrollment remained below prepandemic levels, female and Latinx enrollment was up. ■
Real Estate and Construction
Demand for Fifth District homes softened modestly in
recent weeks, but remained strong. Inventories remained low but increased slightly. Prices were little
changed, and realtors noted homes were still getting
multiple offers, but fewer than in the past year. Average
days on the market increased but remained low. Realtors noted that buyers are increasingly requesting inspections and offering smaller deposits, but many continue to buy homes sight-unseen. One contact added
that buyers were increasingly willing to purchase homes
in urban areas. Builders noted that long lead times for
materials and appliances were slowing construction and
delaying the availability of new homes.
For more information about District economic conditions visit:
www.richmondfed.org/research/data_analysis
E-2
Federal Reserve Bank of
Atlanta
The Beige Book ■ November 2021
Summary of Economic Activity
Economic activity in the Sixth District grew at a moderate pace from October through mid-November. Demand for labor
remained strong amid a tight market. Reports of wage increases were pervasive. Nonlabor costs continued to rise, and
pricing power strengthened. The pace of retail sales was robust; auto sales, however, remained challenged due to
supply chain constraints. Strength in domestic leisure travel activity persisted, while business travel remained soft.
Residential real estate sales increased even as mortgage interest rates rose. Commercial real estate conditions improved. Manufacturing activity was solid, though supply chain disruptions hindered production somewhat. Conditions at
financial institutions were stable, and loan demand improved.
but remain above pre-pandemic levels. The Atlanta Fed’s
Business Inflation Expectations survey showed yearover-year unit costs were relatively unchanged in November at 3.6 percent. Year-ahead expectations increased to 3.3 percent in November, up from 3.1 percent
in October. Both measures have increased sharply over
the last nine months.
Employment and Wages
Demand for labor remained strong over the reporting
period, as the extremely tight labor supply persisted.
Turnover rates rose as employees were lured away by
competing firms offering significant wage increases and
greater flexibility. Several firms lessened educational or
work experience requirements, and one noted they are
considering hiring “vocational graduates from the prison
system.” A trucking company reported an easing of
requirements for CDL drivers by covering more routes
with smaller box trucks or pick-up trucks pulling trailers.
Some large manufacturers lent workers to component
suppliers to relieve labor-related bottlenecks. A technical
college reported that there remains a disconnect for
many students between the coursework they are taking
and the skills needed by employers; too few are pursuing
careers in high-demand occupations such as advanced
manufacturing, skilled trades, construction, aviation, and
automotive.
Consumer Spending and Tourism
District retailers reported strong consumer demand and
expectations for robust holiday sales. Some contacts with
large bases of lower-income consumers cautioned that
the drawing down of excess savings as fiscal supports
expire could result in an eventual softening of demand among these consumers. Automotive dealer inventories remained challenged by supply chain issues;
however, some manufacturers have excluded certain
add-on features to expedite the delivery of vehicles to
market.
While activity at limited-service hotels remained strong,
contacts noted that a lack of available labor limited capacity and the ability to operate at pre-pandemic levels.
Many contacts described the robust level of domestic
leisure activity as pent-up demand that
will normalize over the next 24 months. Business travel
and convention bookings remained well below preCOVID levels, but contacts expect activity to pick up
in the first half of 2022.
Upward pressure on wages to attract and retain talent
remained relatively widespread. Several contacts mentioned that labor costs were already being passed along
to consumers with little resistance, while others said
plans were underway to do so. Many contacts noted that
containing labor costs is a priority.
Prices
Nonlabor costs continued to increase, and inputs such
as raw materials, the availability of which remained
exacerbated by supply chain disruptions, rose significantly. Several contacts reported that costs of freight and
construction materials increased multiple times over the
last year. Pricing power was strong, though contract
negotiations were resulting in shorter terms. Most contacts expect cost pressures to ease steadily over 2022
Construction and Real Estate
Although still strong, housing demand moderated further
from the record highs experienced over the past year.
Nonetheless, the recent uptick in mortgage interest rates
led to an improvement in residential sales, spurred by
homebuyers’ expectations that interest rates will rise
F-1
Federal Reserve Bank of Atlanta
Energy
further. On a year-over-year basis, home prices increased sharply in markets like Atlanta, Nashville, and
central and south Florida. Affordability contracted further
throughout the District. Housing starts were up from year
-earlier levels in most markets. Homebuilders noted
elevated interest from institutional investors seeking to
buy or build new homes for single-family rental units.
Activity across energy sectors picked up over the reporting period as global demand for energy products
strengthened. While contacts reported sustained improvement in oil and gas production, some acknowledged that capital formation for exploration and production has become increasingly challenging. Chemical
manufacturing surged in the region, however, high crude
oil and natural gas costs and supply chain bottlenecks
for numerous inputs continued to constrain growth. Utilities industry contacts noted a sizeable uptick in commercial activity, along with sustained strength in residential
and industrial sales. Contacts also continued to report
significant investment in renewable energy development
and production, primarily in solar, wind, and carbon
capture technologies.
Commercial real estate (CRE) activity strengthened over
the reporting period. Contacts reported improving conditions in the office sector as more businesses reopened.
Activity in the multifamily sector accelerated, though
uncertainty remained regarding future impacts from the
lifting of the eviction moratorium. Contacts continued to
report that competition is accelerating among CRE lenders. Smaller banks and non-bank lenders have been
identified by contacts as some of the more aggressive
CRE lenders.
Agriculture
Agricultural conditions remained mixed. Most of the
District remained drought free. Agriculture producers
indicated supply chain issues and labor scarcity are
putting pressure on margins. On a year-over-year basis,
production forecasts for the District’s corn and soybean
crops were up while rice, peanuts, cotton, and sugarcane forecasts were down. The USDA reported yearover-year prices paid to farmers in September were up
for corn, cotton, rice, soybeans, cattle, broilers, eggs,
and milk. On a month-over-month basis, prices were up
for cotton, cattle, broilers, and eggs but down for corn,
rice, and soybeans while milk prices were unchanged. ■
Manufacturing
District manufacturers continued to report healthy demand over the reporting period, with several noting
record sales. Lead times for components were extended
as supply chain interruptions persisted, hampering production for some firms. Most manufacturers anticipate
stronger sales over the next 6-12 months; however,
lingering labor shortages, rising input costs, and disrupted supply chains could challenge firms’ ability to meet
this demand.
Transportation
Transportation activity remained robust over the reporting period. District ports reported continued growth in
container volumes, noting that customers were buying
safety stocks of inventories, citing a “just in case, rather
than just in time” approach. However, containers were
slow to move off port due to a lack of chassis and trucks.
Inland waterways experienced improvement in the
movement of energy-related cargoes as Gulf refineries
recovered from damages caused by Hurricane Ida. Air
cargo carriers reported higher demand as the cost of
container shipping exceeded air freight rates, in some
cases. Some transportation contacts do not anticipate a
normalization of the overall supply chain until late 2022
or 2023.
Banking and Finance
District banking activity remained steady. Financial institutions experienced stronger consumer and residential
mortgage loan growth, and improved CRE loan demand.
Although margin pressures remained due to the low
interest rate environment, interest income rose as loan
demand strengthened. Deposit levels were stable and
remained elevated. Asset quality was unchanged with
loan losses and net charge-offs still near historical lows.
For more information about District economic conditions visit:
www.frbatlanta.org/economy-matters/regional-economics
F-2
Chicago
Federal Reserve Bank of
The Beige Book ■ November 2021
Summary of Economic Activity
Economic activity in the Seventh District increased moderately in October and early November, and contacts expected a
similar pace of growth over the coming months. Labor and materials supply constraints as well as the spread of COVID19 continued to weigh on the expansion. Employment and business spending grew moderately; consumer spending
and manufacturing were up modestly; and construction and real estate was flat. Wages and prices increased strongly,
while financial conditions improved slightly. A larger than expected corn and soybean harvest pushed up anticipated
2021 farm income.
Employment and Wages
Prices
Employment increased at a moderate pace over the
reporting period, and contacts expected a similar pace of
growth over the next 12 months. Contacts across sectors
again reported difficulty in finding workers at all skill
levels. Many businesses continued to limit operating
hours because of labor challenges, especially in the
restaurant, retail, and manufacturing sectors. In addition,
a few contacts in the professional services sector said
labor constraints were slowing the completion of existing
projects and delaying the start of new ones. Contacts
pointed to childcare issues, school quarantines, retirements, and health safety concerns as factors limiting
labor supply. There were also a few reports of workers
quitting jobs to avoid vaccination requirements. The
pandemic caused some companies to further delay
plans to return to in-person work, and there were some
reports of business closures after COVID-19 exposures
forced workers to quarantine. Overall, wage and benefit
costs increased robustly. A scarcity of applicants for
open positions led numerous contacts to raise wage
offers, yet not all were successful in filling open positions. With starting wages rising, many firms were boosting pay for existing workers in order to retain them. In
addition, turnover rates were higher than usual.
Overall, prices rose rapidly in October and early November, and contacts expected price increases to stay at a
strong pace over the next 12 months. There were large
increases in producer prices, driven by pass-through of
higher materials, energy, labor, and transportation costs.
However, contacts noted that some materials prices,
particularly for lumber and certain steel products, had
stabilized after very large increases earlier in the year.
Consumer prices moved up robustly overall. Contacts
pointed to solid demand, limited inventories, increased
costs, and a greater ability to pass on cost increases to
customers as sources of higher consumer prices.
Consumer Spending
Consumer spending was up modestly over the reporting
period from an already high level. Spending on leisure
and hospitality declined some, notably at hotels, and
especially in areas affected by convention cancelations.
Restaurant sales were little changed. Nonauto retail
sales increased moderately. Halloween-related sales
were noticeably stronger than typical years. Contacts
indicated that demand for furniture and electronics remained solid, though appliance and home supply sales
were constrained by availability and prices. Sales at
discount stores increased significantly, and spending at
department stores was stronger than expected, especial-
G-1
Federal Reserve Bank of Chicago
ly for jewelry, apparel, and accessories. Grocery sales
volumes were flat, but at a high level. After adjusting for
inflation, most forecasts expect holiday spending to
increase modestly versus last year. Light vehicle sales
were little changed in recent weeks, as inventories remained extremely low. Dealer profit margins remained
above their long run averages.
low levels as assemblers and suppliers were constrained
by the ongoing shortage of microchips and other materials. Heavy truck demand was strong, driving down inventories and driving up prices for used trucks. Contacts
reported little change in steel demand, which stayed at a
high level. Demand for steel from the automotive sector
was low but picked up some. Building materials demand
fell slightly yet continued to be strong, supported by solid
orders from commercial construction.
Business Spending
Business spending increased moderately in October and
early November. Retail inventories remained lean in
many sectors due to ongoing supply chain and logistics
challenges, and contacts expected the issues to continue into the second half of 2022. In manufacturing, forsale inventories rose slightly but were still tight, and
there were shortages of a wide range of inputs including
certain metals, chemicals, resins, foam, adhesives,
pallets, paper, and electrical components. Demand for
transportation services remained elevated, with many
contacts reporting continued domestic and international
shipping delays and high cargo and freight rates. Capital
expenditures increased moderately, and contacts expected a similar pace of expansion over the next twelve
months. Lead times remained long for some types of
equipment. Commercial energy consumption decreased
slightly, particularly for smaller establishments, while
residential energy consumption increased slightly.
Banking and Finance
Financial conditions improved slightly over the reporting
period. Business loan demand increased somewhat, with
contacts reporting an increase in commercial loan demand for acquisition financing and lines of credit to cover
higher inventory costs. Construction and multifamily
financing also rose. Business loan quality increased
slightly, while loan standards loosened. In consumer
markets, loan demand was slightly higher overall. Contacts highlighted continued high levels of demand for
auto financing, but mortgage activity weakened some
from a solid level. Loan quality increased slightly, while
standards remained unchanged on balance over the
reporting period.
Agriculture
Expectations for farm incomes in 2021 moved up, driven
by stronger than anticipated corn and soybean yields.
Contacts said the soybean harvest would likely set a
District record, and the corn harvest would likely be the
third largest ever. Despite a sizeable harvest, corn prices
moved higher during the reporting period. Soybean
prices languished but were still above year-ago levels.
Farmers were reportedly purchasing inputs for 2022
ahead of their normal schedules because of concerns
about future prices and availability of fuels, chemicals,
fertilizers, and seeds. Prices for hogs and eggs edged
lower. Cattle and dairy price movements were mixed.
Agricultural land values moved sharply higher. ■
Construction and Real Estate
Construction and real estate activity was similar to the
previous reporting period. Residential construction was
unchanged. Builders indicated that demand was solid,
but material and labor shortages continued to limit activity. Multifamily construction and redevelopment continued
at high levels. Residential real estate activity was steady,
and prices and rents moved up slightly. Nonresidential
construction was mixed, and prices increased modestly.
As with residential construction, materials and labor
supply challenges held back growth in nonresidential
construction. Commercial real estate activity was little
changed on net. Industrial space remained in high demand. A contact based in southeast Michigan reported
that many multifamily transactions were being completed
despite rising costs. Overall, commercial real estate
sales prices increased slightly, but rents were little
changed. Vacancy rates were little changed as well.
Manufacturing
Manufacturing production grew modestly in October and
early November, and contacts reported high backlogs of
unfilled orders. Manufacturers with strong demand were
generally able to increase output, though ongoing labor
and logistical challenges held back production gains for
many. Auto production increased slightly, remaining at
For more information about District economic conditions visit:
chicagofed.org/cfsbc
G-2
Federal Reserve Bank of
St. Louis
The Beige Book ■ November 2021
Summary of Economic Activity
Economic conditions have shown modest improvement since our previous report. Employers reported difficulties adding
workers to meet rising consumer demand, with significant wage increases increasingly common across industries.
Supply chain constraints have contributed to moderate price increases, especially on raw materials. Retailers and nonfinancial services contacts reported increased activity, and banks reported an increase in loan demand. Manufacturing
contacts reported production upticks and increased optimism about the coming quarter. While contacts are optimistic
about continued strong demand in the short term, the rate of growth is expected to slow over the next 12 months.
increased costs for input materials; one construction
contact reported that prices have increased six times
over the course of 2021. A contact in the residential real
estate industry stated the cost of materials for new construction has raised new home prices out of the typical
range for entry- and mid-level buyers. Contacts in the
agricultural industry noted a “dramatic” increase in the
cost of fertilizer due to international supply chain constraints. There have been moderate to robust increases
in prices for raw materials such as coal and cotton string
since the last report. Meat prices have increased in
recent months because of high demand and higher input
costs for materials, labor, and logistics.
Employment and Wages
Employment has increased modestly since the previous
report. Firms continued to recruit workers aggressively
as the recovery continued and the holiday season approaches; two-thirds of contacts planned to increase the
size of their workforce within the year. Worker shortages,
however, remained endemic; half of contacts reported a
decline in job applications since Labor Day, and a third
did not expect to recover to pre-pandemic employment
levels within a year. One large transportation firm held a
job fair where recruiters frequently outnumbered job
seekers; a Kentucky bank lamented that its only option
was to hire individuals with the potential to perform key
roles after a year or more of training.
Consumer Spending
District general retailers, auto dealers, and hospitality
contacts reported higher business activity since our
previous report. October saw that real sales tax collections decreased in Arkansas, Missouri, and West Tennessee relative to September and increased in Kentucky. General retailers reported higher sales and a
somewhat better outlook despite supply chain issues
and labor shortages. Sales exceeded expectations for
auto dealers, but they had a mixed outlook for the coming quarter. A Little Rock dealer expects the chip shortage to persist into 2022 based on their manufacturer and
trade publications. A restaurant in St. Louis reported that
Wages have grown strongly; on net, two-thirds of contacts reported wages had grown since a year ago—a
new high. Three-quarters of hiring firms reported raising
wages for most jobs to entice new hires; very few reported no such raises. One Arkansas pizzeria advertised
$15-20 an hour for delivery drivers; a large transportation
firm, unable to fill its night shift, raised wages from $13 to
$21 an hour.
Prices
Prices have increased moderately since our previous
report. Contacts in the construction industry reported
H-1
Federal Reserve Bank of St. Louis
people have been more willing to dine indoors at restaurants and that they have been relying less on outdoor
seating during colder months. Hospitality contacts reported increased activity in October and that business travel
is starting to rebound.
since our previous report. Industrial real estate remains
strong across the largest District MSAs. In St. Louis,
asking rents for industrial space have increased 25%
since this time last year, while industrial vacancy rates
are at an all-time low. Contacts stated that grocery
stores and mixed-use properties involving hotels, restaurants, and entertainment venues remain popular. A
contact reported that interest in retail is increasing as
returns on industrial and multifamily development shrink.
Manufacturing
Manufacturing activity has modestly increased since our
last report. Survey-based indices suggest that production
and capacity utilization have moderately increased, while
new orders have slightly decreased. Firms in Arkansas
and Missouri reported moderate upticks in production
and slight declines in new orders. Automobile manufacturers, including two major manufacturing facilities in
Louisville, continued to produce below capacity because
of microchip supply shortages. Manufacturers in South
Central Kentucky not reliant on these scarce inputs have
seen their production exceed pre-pandemic levels. Firms
have also been developing their own manufacturing of
components for electric vehicles rather than relying on
global supply chains. On average, firms expect strong
increases in production, capacity utilization, and new
orders in the coming quarter.
Banking and Finance
Banking conditions have improved slightly since our
previous report. District banks reported an increase in
overall loan demand since the last survey period. Credit
card lending increased moderately, while demand for
commercial loans decreased slightly. A contact noted a
slowdown in mortgage lending activity but cited the lack
of inventory as a primary reason. Liquidity remained
elevated and banks continued to report difficulties in
finding investments to deploy excess funds. However,
financial performance has remained strong as many
banks are still recognizing income earned through the
PPP loan program. Delinquency rates increased slightly,
especially for auto and real estate loans, but remained
relatively low. Creditworthiness modestly declined, and
banks reported slightly tightening their credit standards.
Nonfinancial Services
Activity in the nonfinancial services sector has increased
moderately since the previous report. More than 80% of
nonfinancial services contacts reported that quarterly
sales have met or exceeded expectations thus far. Airport passenger traffic has been steady since the previous report, remaining near 80% of pre-pandemic levels.
A childcare contact in the St. Louis area mentioned that
business has been negatively affected by several large
employers not returning to in-person work. Several fitness center contacts noted that concerns about the
Delta variant and corresponding government restrictions
have hurt business. A logistics contact mentioned that
the chip shortage and its impact on the automotive supply chain have hurt business. Several large parcel services have increased hiring in anticipation of the holiday
season.
Agriculture and Natural Resources
District agriculture conditions have remained stable
compared to the previous reporting period. Production
forecasts for corn and soybeans have declined slightly,
while forecasts for cotton remained unchanged and rice
increased. On a year-over-year basis, however, production levels for corn and soybeans are expected to be
moderately higher, while cotton and rice production is
expected to moderately decline. While production has
remained relatively steady, contacts in the District have
expressed concern over rising input prices, specifically
nitrogen and other fertilizers, and labor shortages, which
they fear may cause production shortfalls next year.
District coal production improved modestly in October,
with seasonally adjusted production increasing about 3
percent over the previous reporting period. Production
has improved strongly over the previous year, increasing
20 percent over this time last year. ■
Real Estate and Construction
The residential real estate market has weakened slightly
since our previous report. Total home sales have decreased across the largest District MSAs, but home
prices remain elevated and inventory remains low. Residential construction activity remains high, though contacts reported that the continued high cost of construction, long lead times on key building materials, and supply chain issues are still affecting the speed of new construction. Meanwhile, apartment rental rates across the
District continued to rise slightly this month.
The commercial real estate market has remained mixed
H-2
Federal Reserve Bank of
Minneapolis
The Beige Book ■ November 2021
Summary of Economic Activity
The Ninth District economy grew moderately since early October. Employment saw moderate growth, with labor availability holding back robust hiring demand. Wage pressures were strong, while price pressures increased moderately from
elevated levels. Growth was noted in commercial and residential construction, commercial real estate, consumer spending, professional services, and manufacturing, while residential real estate fell. Ag conditions improved overall, though
drought has negatively impacted certain areas and commodities. Business activity reports were mixed among minorityand women-owned businesses.
Employment and Wages
Worker Experience
Employment grew moderately since the last report, with
tight labor constraints impeding what would otherwise be
a robust employment market. Job postings remained at
exceptionally high levels across the District. Surveys
showed that a large share of firms expected to increase
future employment, with only a very small share
expecting workforce cuts; many firms cited overworked
staff as a motivating reason to hire more employees.
However, surveys also showed that firms were having
increased difficulty filling open positions, particularly for
lower-skill jobs. Some large firms reported a decline in
staff over the past three months, possibly tied to the
federal vaccine mandate. Firms also reported very little
net increase in job applications since the ending of
pandemic-era unemployment programs.
Labor supply remained tight across the District. A
workforce development professional working mainly with
immigrant populations shared that workers in customerfacing jobs were “no longer willing to deal with rude
customers and difficult schedules” and were leaving for
better-paying jobs. Reportedly, some took jobs as
warehouse workers, but others invested in
microbusinesses such as food trucks and cleaning
services. “The pandemic has made people more
comfortable with failure, workers want to feel productive,
and they are taking risks,” said another workforce
contact. A nonprofit contact reported that immigrants in
professional occupations have faced challenges
remaining in a job, more so than getting hired, partly
because of insufficient onboarding and difficulties
penetrating the culture in a remote environment.
Enrollment in nursing programs continued to drop,
according to a health care professional in Minnesota,
putting further pressure on supply of entry-level workers.
Wage pressures remained strong. The frequency and
size of wage increases have steadily increased. A
survey of District firms showed that nearly one-quarter of
firms raised wages by 5 percent or more over the past
year, a notable increase from the previous quarter. A
large majority of firms also said they were increasing
wages for most positions and were increasing wages
more than usual. A tourism firm in Michigan’s Upper
Peninsula reported raising wages more than 5 percent,
noting that it was “not possible to hire or retain
employees at previous wages.”
Prices
Price pressures increased moderately from an elevated
level since the previous report, as firms continued to
pass on input cost increases to customers. More than a
third of respondents to a survey of District businesses
reported that nonlabor input costs were 10 percent
higher than pre-pandemic levels; slightly fewer reported
final prices increasing by more than 10 percent. Contacts
I-1
Federal Reserve Bank of Minneapolis
reported steep, ongoing increases in freight and
transportation costs, particularly for imported goods.
Manufacturers reported increases for inputs, but
particularly for electronic components and raw materials
such as plastic resin. Home heating costs were
forecasted to increase sharply this winter, as natural gas
prices were expected to rise by more in the region than
the national average.
across the District despite significant new construction.
Residential real estate was lower. Closed sales in
October were consistently down by double digits in
markets across the District.
Manufacturing
District manufacturing activity increased briskly since the
previous report, though contacts were concerned about
the ongoing effects of supply chain disruptions. A
regional manufacturing index indicated increased activity
in Minnesota, North Dakota, and South Dakota in
October relative to the previous month. Participants at
recent meetings with manufacturers generally reported
strong recent revenue and new order trends, with
several noting that their firms were having record years
even amid input cost and availability challenges. An
electrical equipment producer reported that it was
planning significant capital investments in capacity to
meet demand, which it reported was up by 30 percent
over last year.
Consumer Spending
Consumer spending grew modestly since the last report.
Firms in accommodation and entertainment reported
growth overall, but acknowledged that the Delta variant
was negatively affecting sales. However, demand
remains robust in some areas. Restaurants have
reported robust sales for take-out and delivery meals.
Same-store sales at a regional convenience chain have
been higher and were expected to continue. Retailers
reported missed sales due to supply chain problems and
related inventory shortages. Vehicle sales dropped in
October compared with a year earlier, thanks mostly to
low inventory of new trucks and cars, which has also
been a drag on trade-ins that drive used-car sales.
Agriculture, Energy, and Natural Resources
Professional services activity across the District grew
moderately. Respondents to a recent business
conditions survey expressed difficulties hiring, and the
majority reported having increased salaries to attract
talent. Businesses reported challenges hiring
experienced communications, IT, and medical
professionals. “Staff is exhausted, patients are
frustrated, and we’re unable to attract doctors to the
area,” said a health care professional. Job openings in
that sector have skyrocketed with vacancies across
occupations.
District agricultural conditions improved overall, though
drought took a heavy toll on certain areas and
commodities. Responses to a survey of agricultural
lenders indicated increased farm income, as producers
continued to benefit from strong commodity prices and
government payments. Drought damage was not as bad
as expected in general, though ranchers saw heavy
losses, and damage to crops was much more severe in
the western Dakotas and Montana’s wheat-producing
region. In other areas, though crop yields will decrease,
timely rains for many were helpful, and higher crop
prices appear to have more than offset the financial loss.
Oil and gas exploration activity in North Dakota and
Montana was stable since the previous report.
Construction and Real Estate
Minority- and Women-Owned Business Enterprises
Commercial and residential construction grew
moderately since the last report. Industry data showed
that the value of construction starts this fall continued to
trend higher. Firms reported good to very good project
activity overall; some attributed lower activity to normal
seasonal slowing. Contacts continued to report
substantial challenges related to labor constraints, high
materials prices, and supply chain disruptions. Firms
also reported a slight increase in project cancellations
compared with summer levels, and project delays
continued to be a major problem.
Business activity reports were mixed among minorityand women-owned business enterprises (MWBEs) in the
region, but there was a general sense of optimism. A
nonprofit that serves minority and women entrepreneurs
reported that 95 percent of microloan recipients survived
the pandemic and remained in business. Forty percent of
MWBE entrepreneurs who responded to a recent survey
reported an increase in sales and revenue in the past
three months; an equal share reported a decrease.
Slightly more than half of respondents said they raised
wages to attract workers. One reported raising wages to
“match rising prices at the pump and rent.” ■
Professional Services
Commercial real estate rose moderately overall. Office
vacancy rates remained elevated, and the Delta variant
has slowed leasing momentum. Industrial space
remained strong, and low multifamily vacancy rates held
For more information on the Ninth District economy,
visit: minneapolisfed.org/region-and-community
I-2
Federal Reserve Bank of
Kansas City
The Beige Book ■ November 2021
Summary of Economic Activity
The Tenth District economy continued to expand at a moderate pace through November. Activity at non-durable manufacturing facilities rose and durable goods production remained at high levels. Several contacts noted a shift in their approach to managing supply chain disruptions toward a strategy of holding larger inventories, adding demand for key inputs. Retail spending continued to grow generally, but event and entertainment businesses experienced a moderate
decline in attendance and bookings. Conditions in the agricultural sector remained strong, supporting ongoing growth in
farmland values. Job gains were broad-based. Demand for workers was driven by strong customer demand as well as a
need to alleviate strains on current employees. Prices rose as labor costs, material costs and transportation costs remained elevated. Several contacts noted that wage pressures were particularly strong among low-skill and front-line
workers, where competition among businesses has led to a significant number of workers switching jobs.
Employment and Wages
Prices
Employment grew at a moderate rate in the Tenth District during October and November. Manufacturers of
non-durables added jobs and significantly increased the
number of hours worked after facing several months of
anemic growth. Job gains at restaurants slowed initially
at the emergence of the COVID-19 Delta variant, but
picked back up in recent weeks. Contacts continue to
report that demand for additional workers remains high.
Nearly all businesses reported raising prices to customers. However, the extent to which those prices offset
increasing cost pressures varied across industries and
differed between small and large businesses. Price
pressures came from a combination of rising labor costs,
elevated material costs and high transportation costs.
Several businesses also noted higher costs associated
with holding or managing inventories amid supply chain
disruptions.
Businesses reported numerous motives for adding jobs,
including the need to meet elevated demand from customers as well as to alleviate strains on their current
workforces and to address skill shortages. Hiring activity
continues to be restrained by a lack of qualified candidates and a declining number of applicants. Most businesses reported that employment levels are at, or near,
pre-pandemic levels. Of those that still have jobs outstanding, most expected employment levels to fully
recover by the end of next year.
Consumer Spending
Retail spending expanded at a moderate rate and grew
broadly across a number of categories. Two exceptions
were spending on motor vehicles, which was mostly
unchanged, and spending at entertainment venues,
which declined slightly as cases of the Delta variant rose
in number. Although growth in spending at restaurants
slowed slightly in early October, most businesses reported a strong resurgence in patronage in recent weeks.
Contacts indicated high confidence that consumer
spending will further expand over the next six months
and that demand remains elevated.
Wages grew at a robust rate over the last two months.
While wage growth was broad-based, many contacts
noted that wages and benefits paid to low-skill workers
increased relatively more quickly.
J-1
Federal Reserve Bank of Kansas City
Manufacturing and Other Business Activity
Banking
Manufacturing activity expanded at a robust pace in
October and November. Growth in manufacturing over
the past year has largely been attributable to durable
goods producers. However, contacts at non-durable
manufacturers reported an uptick in products shipped
and new orders for goods. Expectations for growth over
the next six months were near all-time highs across the
manufacturing sector. Those expectations were supported by a significant booking of future orders, with several
contacts across sectors noting that their business is
booked out further than ever experienced previously.
Overall loan demand increased modestly in recent
weeks, but was mixed across categories. Commercial
real estate loan demand increased modestly, with consumer lending and other commercial and industrial loan
categories remaining stable. Bankers reported a slight
decline in agriculture loan demand and in demand for
residential real estate loans, consistent with seasonal
patterns. Credit standards generally held steady. Bankers experienced modest improvement in loan quality
compared to a year ago, although they anticipate a slight
decline in loan quality over the next six months.
Most contacts attributed the backlogs in their businesses
to both demand and supply factors. For example, growth
in demand for electronic equipment, motor vehicles and
construction projects drove strong demand for microchips and steel products above pre-pandemic levels.
Supply disruptions in those markets added to the backlogs in deliveries, but contacts indicated that they are not
the sole driver. Regarding steel, contacts were attentive
to the new tariff rate quota system negotiated with the
European Union and noted that it could lead to additional
logistical disruptions and uncertainty when implemented
early next year.
Energy
Tenth District energy activity continued to grow at a
moderate rate through November. The number of active
oil rigs increased in Oklahoma, though declined slightly
in Wyoming compared to the previous survey period.
Revenues and profit levels increased considerably from
a year ago. Regional contacts continued to report tight
credit and lending conditions, limiting near-term production growth, despite high commodity prices.
Capital expenditures continued to rise at a robust rate
across businesses. Some contacts noted that limited
availability of vehicles and other heavy machinery are
delaying some planned capital outlays. Several contacts
indicated strong increases in demand for inventories of
inputs to mitigate the consequences of ongoing disruptions, noting this runup is a strategic shift in how their
specific supply chains are managed.
Prices for oil and natural gas were within the average
profitable price range for most firms operating across the
District. Still, over half of firms did not expect U.S. oil
production to return to pre-pandemic levels. Of those
who expected U.S. oil production to recover fully, most
expected it to rebound sometime in 2022. Wyoming
recently shuttered its last underground coal mine, causing local losses of mining-related jobs. While the state
still has several active surface mines, the closure is a
further example of the secular decline in coal mining and
production across Tenth District states.
Real Estate and Construction
Agriculture
Commercial real estate owners reported declines in
vacancy rates in the Tenth District as new leasing activity picked up in recent months. However, most respondents continue to expect vacancy rates to rise over the
next six months. Although most contacts commented
that access to credit for new development projects and
acquisitions was unchanged, some noted shifts in
sources of funding and changes to covenants required
by lenders.
Economic conditions in the Tenth District’s agricultural
sector remained strong amid continued strength in commodity prices. The price of all major crops remained
elevated and harvest estimates in November indicated
that both corn and soybean production are expected to
be at high levels across the District. Cattle prices increased modestly to above pre-pandemic levels in early
November. With healthy conditions across the sector,
farm real estate values increased sharply from a year
ago. District contacts continued to express concerns
about high input prices, yet farm income and credit conditions continued to improve and were expected to remain strong in the coming months. ■
Construction on commercial real estate projects picked
up slightly during the October and November, but expectations for future activity have declined steadily over the
past year. Falling again in October and November, contacts now report expectations for only slight growth in
construction over the next six months.
For more information about District economic conditions visit:
www.KansasCityFed.org/research/regional-research
J-2
Federal Reserve Bank of
Dallas
The Beige Book ■ November 2021
Summary of Economic Activity
Robust expansion continued in the Eleventh District economy, with gains generally broad based across sectors. Growth
in the manufacturing and nonfinancial services sectors stayed strong, though retail sales were mixed. Home sales and
single-family construction remained elevated; however, activity was being constrained by labor, lot, and materials shortages. Apartment demand rose, and office leasing ticked up as well. Loan volumes rose broadly. The energy and agricultural sectors saw continued expansion. Employment rose robustly, and wage growth remained elevated due to widespread labor shortages. Supply-chain bottlenecks continued to drive up costs and prices rose. Outlooks improved
though uncertainty surrounding labor and supply-chain challenges increased.
Employment and Wages
planning for the future. Input costs rose broadly, led by
increases in the manufacturing sector. Supply-chain
constraints continued to be widely cited as a key factor
driving up costs, with some firms reporting continued
double-digit increases in the price of raw materials.
There were several reports of rising freight costs. While
most respondents in the retail, manufacturing, and construction sectors were able to pass on some portion of
the higher costs to customers, numerous service firms
reported holding prices steady and a few noted losing
customers due to price hikes. Airlines said that leisure
travel fares eclipsed pre-pandemic levels during summer, but weak business travel is a drag on overall fares.
A few staffing firms anticipate reducing their markups for
certain clients as a result of the sharp increase in wages.
Employment expanded robustly. Hiring picked up in
construction, manufacturing, and services despite persistent reports of labor shortages and a growing number of
job openings. Several firms noted worsening issues with
retention and hiring, with some noting having to terminate contracts or turn away business due to lack of
capacity. While finding low-skill workers remained the
most challenging, filling mid and high-skill positions was
becoming increasingly difficult as well. One contact said
that competition for tech workers was being further exacerbated by non-local companies looking for remote
workers in cities like Austin. Some firms voiced concern
that the vaccine mandate would make hiring more challenging in an already tight labor market.
Manufacturing
Wage growth remained highly elevated, and numerous
contacts noted continued difficulty retaining workers and
filling vacancies even at much higher wages. An airline
reported offering flight attendants triple pay to work
during peak periods over the coming holiday season. A
parcel shipping firm cited staffing issues despite having
increased hourly pay by 16-25 percent for package
handlers.
Robust expansion continued in the Texas manufacturing
sector. Output growth was elevated and broad based
across sectors, led by durable goods manufacturing.
Supply-chain disruptions or delays remained widespread, with many firms noting that the inability to secure
raw materials was affecting their ability to meet demand.
Several respondents said orders that would typically take
weeks to fill were now taking months. Refiners cited
higher utilization rates, and chemical manufacturers said
that production had fully recovered from the impact of
Hurricane Ida. Chemical margins slipped slightly but
remained at healthy levels. Manufacturing outlooks were
Prices
Upward pressure on input and selling prices remained at
historically high levels, with several contacts noting that
persistent changes in pricing was posing a challenge in
K-1
Federal Reserve Bank of Dallas
positive though uncertainty edged higher due to supplychain constraints.
since the last report. Office leasing activity picked up, but
vacancies remained high, with little improvement expected through yearend. For industrial properties, ecommerce activity continued to drive robust growth in
demand and construction, with Dallas–Fort Worth ranking among the top U.S. markets in both metrics.
Retail Sales
Retail sales dipped in October but rebounded modestly
in November. Growth was mixed across industries, with
auto dealers continuing to report declining sales amid
ongoing supply-chain issues and extremely tight used
and new vehicle inventories. Retailers noted margin
pressure due to rising costs. Outlooks were flat as supply-chain challenges weighed on sentiment.
Financial Services
Loan demand picked up over the past six weeks, bolstering loan volumes. Commercial real estate lending led
volume growth, eclipsing residential real estate lending,
which continued to expand but at a decelerated pace.
Volumes were largely unchanged for commercial and
industrial loans and edged down for consumer loans.
Nonperforming loans continued to decrease, and credit
standards and terms remained unchanged. General
business activity increased further, though contacts
expressed concern over supply-chain disruptions, labor
shortages, and inflation. Outlooks for loan demand and
broader business activity six months from now remained
optimistic, though contacts were less bullish on profitability.
Nonfinancial Services
Texas service sector activity continued to expand at a
solid pace. Revenue growth was broad-based, with
strong increases seen in the transportation and warehousing, administrative support services, and accommodation and food services sectors. Staffing firms saw
broad-based strength in demand and noted that job
orders had surpassed pre-pandemic levels. In transportation services, a parcel shipping company cited rising
shipments and record delivery volumes in September.
Container activity at Texas ports experienced doubledigit growth year-over-year in September, driven largely
by increased consumer spending. There were reports of
port congestion, with wait times for ships averaging
around 60 hours. The slowdown at the ports was being
made worse by a truck driver shortage and a lack of
trucks to haul containers. Airlines said air travel picked
up during the reporting period following a deceleration in
August and September that was driven by the surge in
Delta-variant infections. Holiday bookings were coming
in quite strong, though overall demand for air travel is
expected to be choppy through spring 2022. Service
sector contacts cited rising prices, lengthening wait
times, and greater regulatory risk as potential headwinds
for future growth.
Energy
Oilfield activity rose steadily over the past six weeks.
Optimism remained high among upstream contacts,
boosted by high oil and natural gas prices. However,
supply-chain delays worsened, with significantly larger
backlogs, escalating costs, and material and equipment
lead times as long as 10 months for some types of machinery. Access to capital was slowly improving, but
firms did not expect this to alter drilling plans. Looking
ahead, contacts anticipate a moderate increase in production and improved margins.
Agriculture
Overall, the agricultural sector was doing quite well. Soil
moisture remained mostly favorable, though some areas
have begun getting dry over the past six weeks. Harvesting continued and production was strong, particularly for
cotton and soybeans, far outstripping last year’s numbers. Solid agricultural prices combined with high yields
have boosted many farmers’ financial positions this year.
Contacts voiced concern going forward over higher input
costs—fuel, fertilizer, machinery, etc.—and there were
scattered reports of difficulty sourcing herbicides. On the
livestock side, cattle prices rose, bolstered by solid beef
demand. ■
Construction and Real Estate
Home sales held steady at above-average levels, though
demand has softened relative to the highly elevated
levels seen in spring and early summer. Construction
capacity remained extremely constrained, resulting in
lengthy delays in both lot development and home closings. Home inventories remained low and lot supply
tightened further, nearing record lows in some areas.
Builders’ margins have widened, and outlooks were
optimistic though there is widespread concern about lot
supply and labor and material shortages.
Apartment demand rose further. Occupancy surpassed
pre-pandemic levels, and rents continued their upward
trend, with annual growth at or near record highs in most
District metros. Demand for retail space was steady
For more information about District economic conditions visit:
www.dallasfed.org/research/texas
K-2
Federal Reserve Bank of
San Francisco
The Beige Book ■ November 2021
Summary of Economic Activity
Economic activity in the Twelfth District strengthened moderately during the reporting period of October through midNovember. Employment rose at a moderate pace, while overall conditions in the labor market remained tight. The overall price level moved up significantly, driven by increases in employee compensation and other input prices. Sales of
retail goods rose markedly while activity in consumer services increased at a tamer pace. Conditions in the agriculture
and resource sectors as well as the manufacturing sector strengthened further. Activity in the residential real estate
market expanded at a strong pace despite capacity constraints on construction, while commercial real estate activity
was more mixed. Lending activity picked up modestly over the reporting period.
Employment and Wages
and remote work arrangements as additional measures
to attract qualified talent. Conversely, some employers in
the technology sector mentioned more stable wage
levels due to their ability to hire outside major metropolitan areas.
Employment rose at a moderate pace, while overall
conditions in the labor market remained tight. Demand
for workers continued to significantly outpace supply
across the District. Contacts across sectors reported
substantial difficulties attracting and retaining qualified
candidates, particularly for positions in the lower end of
the wage distribution. Labor shortages reportedly affected production and service capacity in several industries,
including hospitality, retail, food services, transportation,
construction, and manufacturing. Some consumer service providers noted increased rates of voluntary quits
and job offer rejections. In health care, contacts highlighted particular difficulties in hiring workers for nonstandard shifts. A contact in education mentioned that
inability to hire teachers forced some schools to close in
the Pacific Northwest. In contrast, some bankers and
energy providers observed ameliorated hiring conditions.
One manufacturer mentioned increased efforts in hiring
from nontraditional worker programs, such as previously
incarcerated individuals. A few contacts expressed concern over workers’ mental health and increased difficulties balancing work with family responsibilities.
Prices
Prices moved up significantly across the District. Widespread price hikes affected construction materials, retail
food items, and energy, to name a few. Additional price
pressures arose from business services, such as transportation and warehousing. Many contacts reported
passing on increased wage and other input costs to
consumers. One contact in business consulting mentioned rate increases beyond 30 percent for services that
required consultants to travel to and work from clients’
premises.
Retail Trade and Services
Sales of retail goods rose markedly over recent weeks.
Consumer demand for most retail products was reportedly strong even in the face of increasing prices. Several
contacts mentioned continued robust e-commerce activity. Retailers observed labor shortages and rising costs,
which were partly mitigated by an ongoing shift toward
new technologies to substitute for labor, such as selfcheckouts. Supply chain hurdles continue to hinder
inventory building across the District, which retailers
highlighted as an important risk for the high level of sales
expected during the upcoming holiday season. A wood
products provider mentioned that sales at retail home
Wages grew further over the reporting period due to
intensified competition for talent, widespread labor shortages, and rising living costs. Annual percent increases in
pay rates reportedly reached double digits in such sectors as hospitality, construction, and professional services. Many contacts mentioned the continued use of
hiring bonuses, flexible work hours, part-time job offers,
L-1
Federal Reserve Bank of San Francisco
centers were well above pre-pandemic levels. Sales of
vehicles continued to be hindered by semiconductor
shortages and other ongoing disruptions to inventory
building.
difficulties concerning equipment maintenance further
restrained production. A contact in the logging sector
mentioned rapidly rising costs and competition for timberland, as well as reduced supplemental availability of
logs from fire salvages.
Activity in the consumer and business services sectors
rose slightly. Demand in travel, leisure and hospitality,
event management, entertainment, and food services
saw an uptick as the wave of infections driven by the
Delta variant subsided in recent weeks. Business travel,
relative to leisure travel, has been slower to recover from
recent lows. Some contacts in the hospitality sector
noted higher revenues despite lower occupancy rates,
which was attributed to price effects. Demand for transportation services remained elevated but supply was
constrained somewhat by labor shortages and other
capacity-reducing factors. Demand for non-COVIDrelated health-care services rose quickly of late, while
inventories for medical supplies were tighter. Demand for
legal services was uneven, with more client interest for
estate planning than for business formations services,
for example.
Real Estate and Construction
Activity in the residential real estate market continued to
increase at a brisk pace. Demand for both single-family
and multifamily housing was strong across the District,
although declining affordability in parts of the region
reportedly pushed some potential single-family buyers
into the multifamily market. Construction activity remained robust. However, labor and material shortages
hampered the pace of construction somewhat. Building
permit issuance remained solid, while the inventory of
existing homes remained low. Additionally, a few contacts noted tighter availability of new lots for construction
projects. A contact in Alaska highlighted that a large
multifamily housing development project was postponed
due to inflation uncertainty. A statement from Utah suggested that the real estate market stabilized somewhat in
that region.
Manufacturing
Activity levels in the manufacturing sector rose further.
Contacts noted a strong flow of new orders across industries, including metals fabrication, wood products, and
processed foods. However, widespread supply chain
disruptions and labor shortages continued to hold back
production to a certain extent. As a response, manufacturers considered diversifying supply chains and stockpiling raw materials, despite reduced availability and rising
costs for inputs. Some contacts additionally mentioned
increased investment in new technologies and renewable energy as a way to improve resilience in the production process. Capacity utilization remained elevated
overall.
Commercial real estate activity was mixed. Demand for
new office and retail space picked up in some areas,
while it remained subdued in others. One contact in
California expressed concern about permanently lower
demand for office space related to a switch to hybrid
workspaces. Demand for new hotel facilities was weak,
partially due to the impact of the recent Delta wave.
Manufacturing and warehousing spaces were in shorter
supply and had high occupancy rates, especially near
the busy West Coast ports where logistical delays were
observed.
Financial Institutions
Lending activity picked up modestly over the reported
period. Consumer demand for credit card loans, home
mortgage, and insurance products remained strong,
while auto loan origination continued to be hindered by
low vehicle supply. Demand for commercial real estate
loans lagged those for their residential counterparts.
Bankers across the District highlighted elevated deposit
levels, but somewhat lower than in the previous reporting
periods. Underwriting standards reportedly eased of late,
as competition for loans tightened further and interest
margins remained squeezed. Some contacts observed
increased merger and acquisition activity among regional
banks, as well as accelerated business investments in
fintech companies. One contact in California mentioned
that credit to small minority-owned businesses remained
under tight availability. ■
Agriculture and Resource-Related Industries
Conditions in the agriculture and resource-related sectors strengthened over the reporting period. Demand
remained strong domestically and, partly due to a more
favorable foreign exchange environment, internationally,
for the region's meats, produce, seafood, and lumber.
Inventories were at satisfactory levels for most crops,
although crop yields for tree fruit and wheat were relatively lower due to warmer temperatures and water
shortages. Contacts highlighted underground water
availability as being of particular concern. However,
recent rains in Northern California eased drought conditions a bit in some regions. Contacts also noted that a
general lack of readily available labor, continued logistical delays, interruptions related to the Delta variant, and
L-2
Cite this document
Federal Reserve (2021, December 14). Beige Book. Beige Book, Federal Reserve. https://whenthefedspeaks.com/doc/beige_book_20211215
@misc{wtfs_beige_book_20211215,
author = {Federal Reserve},
title = {Beige Book},
year = {2021},
month = {Dec},
howpublished = {Beige Book, Federal Reserve},
url = {https://whenthefedspeaks.com/doc/beige_book_20211215},
note = {Retrieved via When the Fed Speaks corpus}
}