Beige Book
For use at 2:00 PM EST
Wednesday
November 29, 2023
The Beige Book
Summary of Commentary on Current Economic Conditions
By Federal Reserve District
November 2023
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 Atlanta based on information collected on
or before November 17, 2023. 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
1
A-1
The Beige Book is a Federal Reserve System publication about current
economic conditions across the 12 Federal Reserve Districts. It characterizes regional economic conditions and prospects based on a variety
of mostly qualitative information, gathered directly from each District’s
sources. Reports are published eight times per year.
B-1
What is the purpose of the Beige Book?
First District
New York
Second District
Philadelphia
C-1
Third District
Cleveland
D-1
Fourth District
Richmond
E-1
Fifth District
Atlanta
F-1
Sixth District
Chicago
G-1
Seventh District
St. Louis
H-1
Eighth District
Minneapolis
I-1
Ninth District
Kansas City
J-1
Tenth District
Dallas
K-1
Eleventh District
San Francisco
Twelfth District
What is the Beige Book?
L-1
The Beige Book is intended to characterize the change in economic
conditions since the last report. Outreach for the Beige Book is one of
many ways the Federal Reserve System engages with businesses and
other organizations about economic developments in their communities. Because this information is collected from a wide range of contacts through a variety of formal and informal methods, the Beige Book
can complement other forms of regional information gathering. The
Beige Book is not a commentary on the views of Federal Reserve
officials.
How is the information collected?
Each Federal Reserve Bank gathers information on current economic
conditions in its District through reports from Bank and Branch directors, plus interviews and online questionnaires completed by businesses, community organizations, economists, market experts, and other
sources. Contacts are not selected at random; rather, Banks strive to
curate a diverse set of sources that can provide accurate and objective
information about a broad range of economic activities. The Beige
Book serves as a regular summary of this information for the public.
How is the information used?
The information from contacts supplements the data and analysis used
by Federal Reserve economists and staff to assess economic conditions in the Federal Reserve Districts. The qualitative nature of the
Beige Book creates an opportunity to characterize dynamics and identify emerging trends in the economy that may not be readily apparent in
the available economic data. This information enables comparison of
economic conditions in different parts of the country, which can be
helpful for assessing the outlook for the national economy.
The Beige Book does not have the type of information I’m looking
for. What other information is available?
The Federal Reserve System conducts a wide array of recurring surveys of businesses, households, and community organizations. A list of
statistical releases compiled by the Federal Reserve Board is available
here, links to each of the Federal Reserve Banks are available here,
and a summary of the System’s community outreach is available here.
In addition, Fed Listens events have been held around the country to
hear about how monetary policy affects peoples’ daily lives and livelihoods. The System also relies on a variety of advisory councils—
whose members are drawn from a wide array of businesses, non-profit
organizations, and community groups—to hear diverse perspectives on
the economy in carrying out its responsibilities.
National Summary
The Beige Book ■ November 2023
Overall Economic Activity
On balance, economic activity slowed since the previous report, with four Districts reporting modest growth, two indicating conditions were flat to slightly down, and six noting slight declines in activity. Retail sales, including autos, remained
mixed; sales of discretionary items and durable goods, like furniture and appliances, declined, on average, as consumers showed more price sensitivity. Travel and tourism activity was generally healthy. Demand for transportation services was sluggish. Manufacturing activity was mixed, and manufacturers’ outlooks weakened. Demand for business
loans decreased slightly, particularly real estate loans. Consumer credit remained fairly healthy, but some banks noted
a slight uptick in consumer delinquencies. Agriculture conditions were steady to slightly up as farmers reported higher
selling prices; yields were mixed. Commercial real estate activity continued to slow; the office segment remained weak
and multifamily activity softened. Several Districts noted a slight decrease in residential sales and higher inventories of
available homes. The economic outlook for the next six to twelve months diminished over the reporting period.
Labor Markets
Demand for labor continued to ease, as most Districts reported flat to modest increases in overall employment. The
majority of Districts reported that more applicants were available, and several noted that retention improved as well.
Reductions in headcounts through layoffs or attrition were reported, and some employers felt comfortable letting go low
performers. However, several Districts continued to describe labor markets as tight with skilled workers in short supply.
Wage growth remained modest to moderate in most Districts, as many described easing in wage pressures and several reported declines in starting wages. Some wage pressures did persist, however, and there were some reports of
continued difficulty attracting and retaining high performers and workers with specialized skills.
Prices
Price increases largely moderated across Districts, though prices remained elevated. Freight and shipping costs decreased for many, while the cost of various food products increased. Several noted that costs for construction inputs
like steel and lumber had stabilized or even declined. Rising utilities and insurance costs were notable across Districts.
Pricing power varied, with services providers finding it easier to pass through increases than manufacturers. Two Districts cited increased cost of debt as an impediment to business growth. Most Districts expect moderate price increases
to continue into next year.
Highlights by Federal Reserve District
Boston
New York
Economic activity was flat or down slightly. Employment
was stable but labor demand showed weakness. Results
were quite mixed among manufacturers, some of whom
have recently experienced an extended period of weak
activity. Contacts noted an increase in loan defaults for
office properties and expected further distress moving
forward.
Regional economic activity continued to weaken. Though
still solid, labor market conditions cooled, and consumer
spending slowed. Inflationary pressures were little
changed after moderating in recent months. There were
some signs of housing markets becoming more balanced in some parts of the District, though inventory
remained exceptionally low.
1
National Summary
Philadelphia
St. Louis
Business activity continued to decline slightly during the
current Beige Book period. Wage and price inflation
subsided significantly – but price levels remain high for
many items. Consumers became yet more price sensitive, and real consumer spending declined. Employment
grew modestly as labor availability improved further.
Expectations for economic growth remained subdued.
Economic activity has slowed slightly since our previous
report. Retailers and freight transport contacts reported
slowing consumer demand, particularly for high-end
goods. Construction activity slowed, with multifamily in
particular seeing projects delayed or cancelled due to
higher rates.
Cleveland
District economic activity was down slightly. Employment
grew modestly but labor demand softened. Wage pressures were stable but still above average, and price
pressures were modest. Consumer spending was flat as
shoppers sought low-priced options, while construction
and manufacturing sectors both faced challenges. Farm
incomes were also lower.
Minneapolis
The District’s economy contracted slightly in recent
weeks after a long period of stability. Accompanying
slower business activity, labor demand eased further,
and employers reported returning to more normal wage
increases and schedules. Input costs continued to trend
down. Moreover, some firms noted that pricing power
was reduced by weakening demand and competition.
Kansas City
Richmond
The regional economy grew slightly in recent weeks
mainly due to modest increases in consumer spending.
Manufacturers reported mixed activity. Underlying volumes in the transportation sector were low. Residential
real estate continued to be constrained by limited inventory. Commercial real estate activity and lending demand
declined. Employment increased modestly and price
growth moderated slightly.
Economic activity in the Tenth District declined slightly in
recent weeks. Consumers were increasingly likely to
“share a roof and share meals” to manage household
budget challenges. Wage growth remained steady, but
job gains were modest. Most firms reported plans to
raise prices in coming months and noted heightened
uncertainty about the outlook for commodity prices.
Renewable energy activity continued to expand at a
moderate pace.
Atlanta
Dallas
Economic activity grew slowly. Labor markets cooled,
and wage pressures eased. Some nonlabor input costs,
mostly in construction, decreased. Retail sales softened.
New auto sales remained strong. Leisure and group
travel were solid. Housing demand slowed. Banking
conditions were stable. Transportation activity weakened. Energy demand rose. Agricultural conditions improved somewhat.
The Eleventh District economy expanded at a slower
pace than in the previous reporting period, as growth in
services stalled out, retail and home sales fell, and loan
volumes declined at a faster rate. Job growth softened,
and wage growth continued to normalize. Price pressures were above average in the service sector but
modest in other sectors. Outlooks worsened, and uncertainty remained elevated with numerous contacts citing
geopolitical instability and high interest rates as headwinds.
Chicago
Economic activity was up slightly. Employment increased
moderately; business spending was up slightly; nonbusiness contacts saw little change in activity; consumer
spending and construction and real estate activity decreased slightly; and manufacturing was down modestly.
Prices and wages rose moderately, while financial conditions tightened slightly. Expectations for farm incomes in
2023 were little changed.
San Francisco
Economic activity softened slightly. Labor market tightness eased moderately. Wage and price pressures
moderated. Retail sales were flat, and demand for manufactured products remained largely unchanged. Conditions in agriculture were mixed, while real estate activity
softened somewhat. Financial sector conditions weakened further. Local communities faced high demand for
support services.
2
Federal Reserve Bank of
Boston
The Beige Book ■ November 2023
Summary of Economic Activity
Economic activity was flat or down slightly on balance, as prices held mostly steady and labor demand slowed. Retail
results were mixed but neutral on average, and restaurant sales fell slightly. Manufacturers reported modest recent
revenue declines, and a few experienced sharp reductions in demand from a year earlier. Staffing services contacts
enjoyed modest gains in revenues but noted a slowdown in hiring plans among their clients. Residential home sales
were flat at very low levels, and sales were not expected to rebound until interest rates fell. Commercial real estate
activity slowed modestly, and the outlook for office properties was increasingly dim. Outside of real estate, contacts on
balance were cautiously optimistic for at least stable activity moving forward.
widespread. The outlook was mixed but most contacts
predicted stable or slower labor demand moving forward.
Labor Markets
Employment appeared stable on balance, but hiring
activity and hiring plans were dialed back noticeably in
some sectors. Wage growth was moderate on average
and eased further overall. Staffing services contacts
reported slight increases in labor supply and sustained
but modest demand for most roles. The same contacts
said that clients were “rightsizing” their businesses
through occasional layoffs and reduced hiring plans.
Starting wages actually declined for some positions
because of an increased candidate pool, and signing
and retention bonuses became less common. Demand
apparently picked up for legal staffing roles and remained robust for convention staffing positions. Restaurant industry contacts said that labor supply increased
modestly further, with the exception that managers remained scarce. Retail headcounts were roughly steady,
and contacts saw moderately lower attrition and a slight
increase in applications. Labor demand weakened
among manufacturers, as two firms reduced headcounts
sharply from one year ago amid restructuring and others
planned to let headcounts fall gradually through attrition
and conservative hiring. Manufacturers said that wage
growth was stable but stayed at an above-average pace.
A workforce development contact said that select employers were willing to provide training to new hires with
weak qualifications, enabling more first-time jobseekers
to join the labor force, but that the practice was still not
Prices
Prices were stable on average across First District contacts. Retail sticker prices were flat and planned price
increases remained muted relative to recent years. For
restaurants, menu prices held roughly steady and wholesale food prices were also mostly flat in recent months,
excepting modest increases in the prices of pork and
eggs. Restaurants’ profit margins were down somewhat
from a year earlier because menu price increases have
fallen short of overall cost increases. Output prices were
stable across manufacturing contacts, while input costs
were down on balance and several contacts enjoyed
sharply lower freight costs in particular. Contacts expected only modest pricing pressures moving forward.
Retail and Tourism
Retail contacts had flat revenues on average and restaurants had slightly weaker sales. A clothing retailer experienced a moderate decline in year-over-year sales following months of modest growth. The contact said that
unseasonably warm temperatures this fall had delayed
winter purchases, but they saw a rebound more recently
as the weather turned colder and they remained optimistic for the holiday season. A discount retailer saw further
modest improvements in sales volumes, pointing to
strong inventories and the ongoing shift of consumers
toward discount goods. A Massachusetts restaurant
A-1
Federal Reserve Bank of Boston
industry contact reported marginally lower sales throughout the state in recent months, with meal tax receipts
dipping slightly from a year earlier despite a modest
increase in meal prices over that same period. There are
now more restaurant establishments in the state than
there had been prior to the pandemic. Restaurant owners remained optimistic for the holiday season, but maintaining profitability was expected to be an ongoing challenge.
stable and vacancy rates edged up to near 20 percent.
Retail market fundamentals were stable but prospective
tenants delayed lease signings amid uncertain consumer
demand. One contact noted strong performance of hotel
properties, particularly in Boston. High borrowing costs
continued to deter commercial property sales and construction. The outlook for office properties was seen as
dire, with loan defaults on the rise and valuations likely to
fall further. Also, contacts predicted a glut of life sciences
space in Boston for 2024. Broadly speaking, contacts
expected somewhat slower leasing and sales activity in
2024, but noted that results would depend heavily on the
direction of interest rates and consumer demand.
Manufacturing and Related Services
Reports were mixed for our manufacturing contacts, with
revenues down modestly on balance and only one firm
reporting robust sales growth. Several contacts reported
significant revenue declines from one year earlier, in one
case because of a comparison to an unusually strong
2022 benchmark and in other cases because of lackluster demand in 2023. A maker of testing equipment attributed weaker demand to reductions in COVID-related
medical spending. A microelectronics industry contact
said that the down cycle that started in the third quarter
of 2022 is the longest in the history of the industry. A
chemical manufacturer said higher interest rates were at
least partly to blame for sharply weaker sales in 2023.
Contacts with slowing sales said they were reducing
capital expenditures, but only slightly, as the returns to
automation remained high. Outlooks were guardedly
positive on balance.
Residential Real Estate
Across the First District, residential real estate sales
were about flat in recent months net of seasonal adjustments. Considering year-over-year changes to September or October, home sales were down sharply from a
year earlier, although in some markets the pace of decline moderated a bit. The greater Boston area experienced its weakest September for single-family home
sales since 1995. Condominium sales were down by
more moderate margins but were also historically weak.
Prices continued to climb at a moderate-to-strong pace
owing to very low inventories. Although inventories fell
again on a year-over-year basis, the pace of decline
moderated, and modest seasonal supply increases were
seen in September from August. Contacts again pointed
to high interest rates as the most important factor holding
back activity in the residential property market, and
therefore pinned the outlook for sales on the course of
interest rates in 2024.■
Staffing Services
First District staffing firms reported modest revenue
increases on balance in the third quarter of 2023. Revenue gains were driven by elevated pay rates for temporary placements and temp-to-hire roles, positions which
have rebounded since the pandemic. Nonetheless, the
overall hiring plans of staffing firms’ clients seemed to
slow on balance. Given the slowdown, one staffing contact decided not to fill an internal talent acquisition position that had been created by a resignation. The outlook
was cautiously optimistic, as firms expected stable demand on balance. One contact hoped to expand into a
new geographic region, provided revenues held at least
steady in the coming months.
Commercial Real Estate
Commercial real estate activity slowed further on balance, albeit modestly. Demand for industrial space
weakened a bit, particularly among e-commerce and
warehousing tenants. Industrial rent growth slowed but
remained positive, and vacancy rates increased slightly
from near-zero levels. Office leasing was flat on balance;
a Hartford contact described activity as anemic, and a
Providence contact saw an uptick that was limited to
renewals and downsizing moves. Office rents were
For more information about District economic conditions visit:
www.bostonfed.org/regional-economy
A-2
Federal Reserve Bank of
New York
The Beige Book ■ November 2023
Summary of Economic Activity
Economic activity in the Second District continued to weaken during the latest reporting period. Labor market conditions
cooled but generally remained solid. Though employment edged up slightly, labor demand softened and workers have
become easier to find. Inflationary pressures were little changed after moderating in recent months. Consumer spending
continued to slow. Manufacturing activity grew modestly, though orders were weak. Tourism activity in New York City
slowly inched back toward pre-pandemic levels. Housing markets in parts of the region have started to show signs of
becoming more balanced, though low inventory continued to restrain sales activity. Residential rental markets plateaued. Commercial real estate markets remained strained. Conditions in the broad finance sector weakened slightly,
with loan demand declining and delinquency rates edging up. The outlook worsened, with businesses in the region no
longer expecting economic conditions to improve in the coming months.
Labor Markets
Prices
Labor market conditions cooled but generally remained
solid. On net, employment continued to increase in the
latest reporting period, edging up slightly. However,
contacts reported some softening in labor demand and
improvements in worker availability across the District.
After nearly four months, the recent settling of the Screen
Actors Guild strike is expected to restore jobs for many
New York City-area workers who were affected.
Inflationary pressures were little changed in the most
recent reporting period. The pace of input price increases generally held steady. While the prices of some inputs
such as freight and logistics have come down, contacts
reported rapidly growing costs for other inputs, particularly utilities and insurance. The pace of selling price
increases also held steady this reporting period. However, looking ahead, more contacts expect the pace of
price increases to pick up in the coming months.
Contacts noted that some companies have become
cautious about adding to their headcounts in recent
weeks. Layoffs and hiring freezes in the tech industry
outside of the region have boosted the availability of tech
workers. Still, despite some recent improvement in worker availability, labor supply remains an issue for most
industries. Regional businesses overwhelmingly reported
that the inability to find workers with the right skills was
restraining hiring plans.
Consumer Spending
On balance, consumer spending continued to slow but
remained solid. Increases in health care spending were
offset by ongoing declines in spending on travel and
entertainment. Auto dealers in upstate New York reported solid growth in sales activity for both new and used
cars, as improving inventory continued to expand options
for buyers. While creditworthy buyers were able to get
financing, those with lower credit scores have increasingly found it difficult to secure auto loans. With higher
interest rates, car loan terms are getting longer as 84month loans have become the norm.
The pace of wage growth slowed somewhat in recent
weeks, especially for finance and information services
firms. In fact, a New York City-area company noted a
reduction in starting salaries for recent college graduates
as tech workers have become easier to find. Looking
forward, firms plan on increasing employment only modestly in the coming months.
B-1
Federal Reserve Bank of New York
Manufacturing and Distribution
Residential rental markets plateaued, with rents holding
steady near historically high levels. New lease activity
continued to fall, with landlords focusing on retaining existing tenants. In New York City, there was a small uptick in
the supply of rental units, possibly due to the increased
enforcement of rules restricting short-term rentals.
Manufacturing activity grew modestly during the latest
reporting period, though orders declined slightly. Delivery
times shortened and supply availability continued to
improve, but some contacts reported ongoing challenges
with the supply of raw materials and durables. Motor
vehicle inventory continued to improve, and dealers
indicated that the UAW strike had minimal impact on
inventory levels. Wholesalers and transportation & warehousing contacts reported declining business activity.
Looking ahead, manufacturers do not expect activity to
increase in the coming months.
Commercial real estate markets weakened for both office
and industrial space, as vacancy rates edged up and rents
declined across much of the District. Upstate New York
office markets saw notable increases in vacancy rates,
while the worsening trend in New York City’s office market
continued after a pause during the last reporting period.
The industrial market also deteriorated, with vacancy rates
increasing and rents softening from long-term highs seen
during the summer.
Services
Service sector activity declined modestly in the latest
reporting period. While businesses in leisure & hospitality reported modest growth, businesses in education,
finance, and those providing business services reported
sluggish activity. Service firms do not expect much improvement in the months ahead.
Overall, construction contacts reported declining activity
since the last report. Office construction dropped across
the District. Multi-family construction also slowed, constrained by tight credit conditions and increased costs.
Still, industrial construction continued to grow, with high
volumes under construction and new space set to come to
market in the fourth quarter of 2023 and early 2024
New York City tourism continued to inch back slowly to
pre-pandemic levels. While New York City hotel occupancy rates remained higher than other U.S. cities, the
lack of visitors from Asia remained a drag on the tourism
recovery. Contacts reported that geopolitical instability
overseas is beginning to dampen travel planning. Still,
mid-week hotel demand in New York City was strong,
reflecting increased business travel—a positive sign that
an important part of the City’s tourism economy is showing progress after lagging through much of the recovery.
Banking and Finance
Conditions in the broad finance sector weakened slightly
during the latest reporting period. Small to medium-sized
banks in the region overwhelmingly reported lower loan
demand across all loan segments, including refinancing.
While most banking contacts reported that credit standards
were unchanged, a substantial number reported tightening
standards for business and commercial loans. On balance,
loan spreads narrowed, deposit rates rose higher, and
delinquency rates edged up.
Real Estate and Construction
Housing markets in some parts of the region have started to show signs of becoming more balanced for buyers
and sellers, though low inventory continued to restrain
sales activity and other parts of the region remained red
hot. Home prices have generally continued to trend up
despite relatively high mortgage rates. Contacts in upstate New York noted some cooling in demand along
with an increase in listings, in part due to people leaving
New York state. While demand softened in New York
City, demand in its suburbs remained extremely strong,
with record high prices and bidding wars on about half of
sales. While creditworthy buyers were able to obtain
mortgages, the availability of credit has become an issue
for some buyers. One contact noted that buyers needed
increased attentiveness to get lenders to the closing
table.
Community Perspectives
Homelessness has reached unprecedented levels in many
parts of the District, driven by a shortage of affordable
housing and the arrival of asylum seekers. Local governments are not able to meet the growing need for shelter,
and the locations of new temporary shelters have been the
subject of intense debate. Community planners, non-profit
organizations, and government entities managing the
homelessness crisis are considering new strategies to
increase the supply of affordable housing units. While
success has been limited, strategies have included repurposing government structures, incentivizing accessory
dwelling units, and increasing tax incentives and private
sector collaborations. ■
For more information about District economic conditions visit:
https://www.newyorkfed.org/regional-economy
B-2
Federal Reserve Bank of
Philadelphia
The Beige Book ■ November 2023
Summary of Economic Activity
On balance, business activity in the Third District continued to decline slightly. High interest rates and tightening credit
standards continued to constrain demand for big-ticket consumer items and private market transactions. Wage and
price inflation subsided significantly – to a still-modest pace somewhat higher than the pre-pandemic rate – but price
levels remain high for many items. Consumer spending fell modestly in real terms across most segments as consumers
became yet more price sensitive. Low-income households have struggled the most. Despite demand falling slightly,
employment grew modestly as more job candidates applied and hiring difficulties eased. Overall, contacts’ concerns
have shifted away from COVID-19, supply chain issues, and labor market issues to uncertainty about interest rates,
world affairs, and the 2024 election cycle. On balance, expectations for economic growth over the next six months are
mostly positive but remain well below historical averages.
Labor Markets
percent in the fourth quarter of 2023, from 4.3 percent in
the third quarter (and from a peak of 5.8 percent in the
third quarter of 2022). Expectations averaged 3.2 percent prior to the pandemic. Expected compensation
growth fell to 4.1 percent for manufacturers and to 4.2
percent for nonmanufacturers.
Employment grew modestly – faster than the slight
growth in the prior period. In our monthly surveys, nonmanufacturing firms reported further increases in fulltime jobs and an uptick in part-time employment. Manufacturing firms reported a slight increase in employment
levels but noted a modest decline in the average employee workweek.
Prices
On balance, firms reported that price increases subsided
significantly but remained modest – somewhat higher than
the typical increases in the 1.5 to 2.0 percent range that
were observed before the pandemic.
Contacts continued to note an increase in job applicants
but a dearth of qualified candidates. Looking ahead and
citing expectations of weaker demand, firms expressed
more caution about future hiring. A staffing contact reported that orders were down year over year for the firm
as well as for most of its peers, although an uptick had
narrowed the decline recently.
Firms reported that increases in prices received for their
own goods and services over the past year fell significantly in the fourth quarter of 2023 compared with the third
quarter. The trimmed mean for reported price changes, as
indicated by responses to our quarterly survey questions,
fell to 3.6 percent from 4.5 percent for all firms. Price
increases fell to 3.0 percent among nonmanufacturers
and to 4.2 percent for manufacturers.
In a broad annual survey of all of our contacts, 40 percent expected employment to increase over the year, 45
percent expected no change, and 16 percent expected a
decrease. The net 24 percent of firms that hope to hire is
the lowest share we’ve recorded dating back to 2011.
Contacts noted that while inflation has subsided, many
prices remain at new high levels – straining household
budgets and business profitability. Some food pantries
recently reported that 25 percent of the families served
are new; other pantries exist to serve university students.
Meanwhile, food banks are struggling to secure food.
Firms reported that wage inflation continued to subside
and is approaching pre-pandemic levels but remains at a
modest pace overall. On a quarterly basis, firms’ expectations of the one-year-ahead change in compensation
cost per worker edged down to a trimmed mean of 4.1
C-1
Federal Reserve Bank of Philadelphia
Looking ahead one year, the increases that firms anticipated in the prices for their own goods fell significantly.
The trimmed mean for all firms fell to 2.7 percent in the
fourth quarter of 2023, from 3.7 percent in the third quarter. After reaching a peak of 5.9 percent in the fourth
quarter of 2021, expectations are now only slightly above
the quarterly average of 2.3 percent for 2016 through
2019. The expected rate of growth fell to 2.3 percent for
nonmanufacturers and to 3.1 percent for manufacturers.
– significantly slower than the moderate pace observed
last period and during the same period last year.
During the period, District banks reported moderate
growth in home mortgages, modest growth in commercial and industrial loans, and slight growth in home equity lines and other consumer loans. Commercial real
estate loans were flat, while auto loans fell modestly.
Credit card volumes were flat following strong growth
last period. The pace of growth had been modest during
the comparable period last year; however, little or no
growth was typical for the comparable time period in
most pre-pandemic years following the Great Recession.
Manufacturing
Overall, manufacturing activity declined slightly during
the period following a modest decline in the prior period.
The index for new orders edged up slightly; however,
shipments sank deep into negative territory after oscillating over the past four months.
Expectations among manufacturers for growth in the
next six months remained mostly positive but weakened
considerably compared with historical averages.
Banking contacts noted that delinquencies and bankruptcies are rising but remain at low levels – overall credit
quality remains sound. However, nonprofit agencies
continued to report higher cash flow problems among
small and minority businesses as banks tighten credit
standards.
Consumer Spending
Real Estate and Construction
On balance, retailers (nonauto) continued to report a
modest decline in real sales. Some contacts noted that
nominal sales were flat or slightly increased. Most said
that lower-income consumers were shopping for discounts and spending less; one observed that middleincome consumers were buying fewer items per trip.
Brokers reported that existing-home sales were mired at
historically low levels – still buffeted by high prices, high
interest rates, and low inventories. New-home builders
reported a slight decline in home sales but noted that
demand remains strong. People with means continue to
buy new or existing homes, while affordability has forced
many potential buyers to remain in the rental market.
Auto dealers reported a slight decline in unit sales after
holding steady in the prior period. Contacts noted that
supply constraints have mostly ended, but pent-up demand persists – sustaining high prices. Contacts observed that electric vehicles were accumulating on dealer lots as high prices, high interest rates, and consumer
hesitancy curbed demand.
According to contacts, high interest rates continue to
have a dampening effect on commercial real estate
market transactions and on new construction. Leasing
activity declined slightly accompanied by growth of concessions. The construction pipeline is not yet full for
2024. Activity fell slightly; however, infrastructure projects are keeping some firms very busy. ■
Tourism activity continued to decline slightly. Contacts
noted that demand is weakening and pricing is softening,
especially for budget-oriented properties. One contact
noted that business travel has eased – adding that it had
not yet fully recovered.
Nonfinancial Services
On balance, nonmanufacturing activity resumed a slight
decline following a modest decline in the prior period.
The index for new orders remained negative, while the
shipments index turned positive by the end of the period.
Expectations among nonmanufacturers for growth in the
next six months improved somewhat but remained well
below historical averages.
Financial Services
For more information about District economic conditions visit:
www.philadelphiafed.org/regional-economy
The volume of bank lending (excluding credit cards)
grew slightly during the period (not seasonally adjusted)
C-2
Federal Reserve Bank of
Cleveland
The Beige Book ■ November 2023
Summary of Economic Activity
Overall, reports from contacts suggest that business activity in the Fourth District declined slightly in recent weeks,
ending a period of stable activity that began in late spring this year. Contacts generally expected similar business conditions to persist in the coming months. Consumer spending was down, and general merchandisers reported discretionary
goods spending declined, a trend they were hopeful would reverse with the holiday shopping season. Manufacturers
that produce intermediate goods used in auto production noted that orders slowed, a situation which one contact attributed to the UAW strike. Higher interest rates continued to dampen loan demand, and several bankers reported that
delinquencies edged up for specific loan categories but remained low on balance. Employment levels were flat as many
firms restructured staffing for efficiency and as wage pressures continued to ease. According to contacts, nonlabor cost
pressures changed little in recent weeks, while the proportion of firms reporting price increases was the lowest since
2020.
added that some construction subcontractors were now
reaching out to offer reduced fees to fill their project
pipelines. Still, other firms continued to report cost increases for health insurance, software licenses, and
technical support services, while some restauranteurs
and wholesalers noted a recent uptick in the cost of
beef, chicken, and dairy products.
Labor Markets
On balance, contact reports suggested little employment
growth in the recent reporting period. Several financial
services firms restructured staffing to gain efficiencies,
including limiting hiring to revenue-generating roles and
reducing staff in underperforming product or market
areas. Some manufacturing firms reported lowering
head counts through attrition and layoffs because of
softening demand for their goods.
Wage pressures eased further in recent weeks. Many
firms across industries reported returning to annual
wage adjustments and not offering unscheduled raises
like they had over the past few years. For example, one
commercial real estate contact said, “after 18–24
months of increases, wage growth has seemingly leveled off.” And a hospitality contact noted that his firm
was at a “good wage level.” Nevertheless, some firms
said they increased wages for workers in high demand.
For instance, one freight hauler gave raises to drivers,
but not to other employees. Some bankers and manufacturers also continued to increase pay to attract and
retain skilled workers.
Nearly two-thirds of contacts reported leaving their prices unchanged. Many contacts in manufacturing and
freight said they were holding prices steady or, alternatively, reducing them to stay competitive, even in cases
in which costs were increasing. Meanwhile, a homebuilder and an auto dealer sought to alleviate consumers’
affordability concerns through incentives and interestrate buydowns by the former and increased discounting
by the latter. Another homebuilder noted cutting the size
of homes and amenities to keep average unit prices from
rising. Nevertheless, two restauranteurs who had not
increased prices recently reported that they planned to
do so at the start of next year. Contacts who were raising prices generally did so selectively to make up for
increased costs.
Prices
Consumer Spending
Consumer spending softened in recent weeks. Multiple
general merchandisers reported declines in discretionary
goods sales. Likewise, reports from restauranteurs and
wholesalers tied to the restaurant industry suggested
slower spending on discretionary services. Auto dealers
Nonlabor cost pressures changed little in recent weeks
according to contacts, though they’ve generally trended
down since the start of the year. Many manufacturing
and construction contacts said input costs, in particular
for steel and lumber, were flat to down. One contact
D-1
Federal Reserve Bank of Cleveland
continued to report sluggish sales that they attributed to
higher financing costs and vehicle prices; one dealer
also noted that customers were holding off on purchases
because of unusually low trade-in offers for used vehicles. Contacts across retail segments generally expected
demand to remain soft in the near term, though some
were hopeful that the coming holiday shopping season
would boost sales.
utilization by low- to middle-income consumers who had
spent down excess savings. Core deposit growth continued to be soft amid persistent rate competition.
Non-financial Services
Demand for professional and business services was
solid, while demand for freight services was mixed.
Professional and business services firms reported increased demand for their technology-related and engineering services. One contact noted that consumers’
continuing shift to online buying had increased demand
for his firm’s services. These contacts generally anticipated that demand would remain steady going forward.
Freight contacts reported an increase in certain markets
such as grain and chemical transport. However, demand
decreased for freight related to retail products and construction materials, for which the decrease for the latter
was linked to customers’ pausing projects. Freight firms
typically expected demand to be flat in the coming
months.
Manufacturing
Overall demand for manufactured goods was flat. Orders
slowed for producers of intermediate goods used in auto
production, including paints, coatings, and suspension
systems, likely as a result of the UAW strike. Firms tied
to commercial construction also experienced declines in
orders, with one HVAC parts producer reporting considerable order declines. Reports from primary and intermediate metals producers were mixed. One steel producer
reported increased orders as his firm’s customers
worked to boost their inventories. By contrast, orders for
other metals producers were flat to down, and one producer said demand for his firm’s products had reached
its lowest level in 25 years. Manufacturers generally
expected little change in demand in the coming weeks.
Community Conditions
Nonprofit contacts noted that while demand for skilled
tradespersons remained elevated, barriers to entry persisted for many lower-wage jobseekers. To meet the
need for skilled labor and mitigate some of these barriers, one workforce-development contact described a
construction apprenticeship program that recently
opened an onsite childcare center and provided transportation to the job site. Demand for affordable housing
remained high, and availability of affordable units was
tight. Several contacts said homelessness had spiked
recently and cited multiple reasons, including elevated
rents, fewer landlords accepting housing choice vouchers, and more competition for affordable-housing units.
One nonprofit indicated that construction costs were too
high to build affordable housing because of current tight
credit conditions and higher interest rates.■
Real Estate and Construction
Overall, residential construction and real estate contacts
indicated that activity slowed this reporting period. Higher interest rates and increasing construction costs dampened demand for new homes. On the existing homes
side, the market continued to suffer from a lack of inventory. Looking ahead, contacts expected demand to
weaken further as interest rates remained elevated.
Nonresidential construction slowed in recent weeks.
Multiple general contractors reported that their clients
had delayed or reconsidered projects because of higher
financing costs or economic and political uncertainty.
Demand for commercial real estate was soft, in particular
for older office space. In addition, one commercial realtor
noted that demand for industrial, retail, and apartment
space had begun to weaken. Nevertheless, many contacts expected conditions to improve in the coming
months.
Financial Services
Loan demand declined in recent weeks as higher interest rates discouraged both households and businesses
from borrowing. Bankers expected loan demand to
weaken further in the coming weeks because of elevated
interest rates and economic uncertainty. Several bankers
reported that delinquencies increased slightly for certain
loan categories such as credit cards. One banker attributed the uptick in credit card delinquencies to a rise in
For more information about District economic conditions visit:
www.clevelandfed.org/en/region/regional-analysis
D-2
Federal Reserve Bank of
Richmond
The Beige Book ■ November 2023
Summary of Economic Activity
The Fifth District economy grew slightly in recent weeks, mainly due to continued strength in consumer spending. There
were some reports of reduced spending on durable goods like furniture and appliances, but spending on nondurable
goods and on travel was strong and growing. Nonfinancial service activity remained stable, however real estate activity
and bank lending softened amid higher interest rates. The labor market remained tight, overall, but employment rose,
and some firms reported finding workers a little easier. Price growth moderated slightly in recent weeks but remained
elevated on a year-over-year basis.
Labor Markets
Manufacturing
Employment in the Fifth District picked-up moderately in
the most recent reporting period. Although the labor
market remained tight, several contacts reported some
easing. A motorcoach company reported that they were
still understaffed but that finding workers “is better than it
was.” This was the first time they indicated hiring optimism in several years. A construction company reported
that a slowing industry made finding workers a little
easier. Retaining workers, especially high performers,
was mentioned by several contacts. For example, a
general contractor reported wage increases as large as
15% to retain their highest performers.
Fifth District manufacturing activity remained mixed. A
textile manufacturer reported an increase in demand
because their clients have worked through the excess
inventories that they built up during COVID and were
now needing to place new orders. Conversely, a furniture manufacturer reported that the home furnishings
industry had been in an 18-month recession and did not
expect demand to increase soon. To counteract labor
shortages and declining purchasing power from businesses and households, several contacts invested in
automation to increase productivity and manage costs. A
contact that produces equipment for businesses invested
in automating several of their back-office functions to
reduce the need for labor. A coffee manufacturer incorporated a suite of customer-service software products
that will change the type of skills needed as well as the
amount of labor.
Prices
Year-over-year price growth moderated slightly in recent
weeks but remained elevated. According to our most
recent surveys, prices received by service providers
increased by a little more than four percent compared to
last year, this was down from the peak of about seven
percent, but still elevated compared to historical averages. Meanwhile, prices received by manufacturers increased by just over two percent compared to the same
time last year. A few contacts noted that higher interest
rates were making the cost of operations more expensive.
Ports and Transportation
Volumes were sluggish at Fifth District ports this period
as trade volumes were down; imports were flat year-over
-year but up slightly month-over-month. The higher import volumes were mainly due to more consumer goods
coming into the ports. Exports were mostly down this
period. Spot shipping rates continued to decline on
transatlantic cargo but were slightly up on freight from
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Federal Reserve Bank of Richmond
Asia. The ports were not having any issues with container congestion and railroads were no longer metering
freight. Carriers were doing more blank sailings to
streamline services in order to cut costs and have greater vessel utilization. Demand for airfreight improved this
period, especially for exports. Air cargo rates were back
to 2019 levels.
retail were both fairly stable with low vacancy levels and
rising rental rates. In the office sector, owners were
having to offer generous concessions, incentives, or
tenant improvement allowances to secure new leases—
so effective rental rates were much lower. In multifamily,
rents were flat or down due in part to the amount of new
construction coming to market. Banks were being very
selective on financing any type of CRE investment. The
lack of available financing dampened a broad range of
activities within the CRE sector, including new development and refinancing. Contractors noted a slowdown in
new work.
Trucking firms reported that underlying demand was
low, particularly on the industrial side as freight volumes
for construction materials were down. Due to decrease
capacity in the less-than-truckload segment, spot prices
remained stagnant. However, freight rates in the truckload segment were down slightly this period. Trucking
firms noted that drivers were more readily available but
that it remained very difficult to hire skilled mechanics.
Trucking companies stated that they were not having
any issues maintaining their fleet of trucks and trailers
and that there were no significant backlogs on orders of
new equipment.
Banking and Finance
Loan demand continued to slow down with several respondents describing demand as “softening.” This was
observed in all loan portfolios, but especially in the commercial and consumer real estate segments. Higher
interest rates as well as global and domestic political
concerns were noted as factors driving this softening
demand. Many institutions renewed their focus on deposit retention and growth by continuing to increase
rates with a focus on money market accounts and certificates of deposit. Overall loan delinquencies and credit
quality remain stable with institutions continuing to monitor their portfolios closely and making underwriting adjustments as needed.
Retail, Travel, and Tourism
Consumer spending increased modestly, on balance, in
recent weeks. Reports from retailers, however, were
mixed. Clothing and grocery stores reported steady to
increasing sales and demand while furniture and appliance stores reported declines in purchases. A jewelry
store owner said that foot traffic was steady, but sales
were down, and they felt that some customers were
browsing now but waiting until closer to the holidays to
make any purchases. Meanwhile, travel and tourism
contacts generally reported steady to increasing activity.
A hotel chain manager said that after experiencing a lull
in the summer, fall bookings were up and better than
expected. Airline bookings remained solid and passenger traffic was up compared to last year.
Nonfinancial Services
Nonfinancial service providers continued to report that
demand for their services as well as revenues remained
stable. One firm observed from their clients that available
capital is still sitting on the sidelines due to increased
borrowing costs, which, in turn, has constrained the
clients’ growth opportunities. Wage and expense pressures still existed but have started to moderate. A staffing firm noted there was still demand for high skilled
workers and a slight increase in the candidate pool. One
firm expressed concern that demand was going to soften
due to the restarting of student loan repayments and
decreased discretionary income available to consumers.
■
Real Estate and Construction
Residential real estate respondents indicated that sales
volumes and buyer traffic decreased this period as
buyers pulled back amid low inventory and higher mortgage rates. The number of new listings were down as
well. Days on market increased slightly but remained
below historic averages. Sellers were often providing
concessions and/or dropping sale prices for homes that
have been on the market for over 30 days. However,
there remained upward pressure on home prices, especially in more desirable neighborhoods. Builders indicated that it was more difficult to build new homes at a fair
price due to the high cost of materials, labor, trades, and
financing.
In the Fifth District, overall market activity in commercial
real estate (CRE) was slow this period. Industrial and
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 2023
Summary of Economic Activity
The economy in the Sixth District grew at a tepid pace from October through mid-November. Labor availability and
employee retention improved, and wage pressures continued to ease. Some construction input costs fell, but fuel prices
and insurance costs rose; pricing power dwindled. Retail sales moderated; new auto sales were strong, although demand for used cars declined. Domestic leisure and group travel was healthy, but spending at hotels slowed. Home sales
remained constrained as house prices and mortgage interest rates rose. Commercial real estate activity decelerated.
Demand for transportation services remained soft. Loan growth was flat. Energy demand increased.
Community Perspectives
Labor Markets
Jobseekers and workers in lower-wage positions expressed ongoing confidence in the labor market, both in
available opportunities and in the potential to secure
better pay. Still, many reported ongoing difficulties to
cover basic household expenses. Business contacts
affirmed that high prices continued to squeeze consumer
finances, with rental delinquencies rising slightly and
financially constrained households relying to a greater
extent on credit card debt to get by. Some civic leaders
shared concerns that worker shortages in construction
could delay anticipated infrastructure investments. Workforce development contacts indicated that employers are
finding labor more readily available when offering on-thejob training.
Most business contacts reported that labor markets
softened further but continued to describe conditions as
tight. Labor availability, retention, and candidate quality
improved. Firms that required in-office attendance experienced higher turnover in professional roles than companies with more flexible work arrangements. The pace
of hiring slowed for most, and many employers noted
being more selective as they backfilled roles while letting
low performers go. Fewer firms reported hiring to expand
headcount. Reports of worker shortages varied considerably by occupation across the region but were more
widespread among South Florida contacts.
Most firms indicated that wage pressures continued to
ease, and further moderation is expected next year.
Several contacts noted that rising healthcare costs would
be passed along to employees in 2024.
Consumer Spending and Tourism
Similar to the previous report, retailers noted a softening
in consumer spending, which was again described as a
normalization from the pandemic’s strong pace of
growth. Demand for services and luxury goods remained
robust; however, lower income consumers continued to
trade down. Automobile dealerships reported that manufacturers were offering incentives for new vehicle purchases, resulting in strong sales, but that the demand for
used vehicles ticked down. Most retailers do not expect
significant declines in sales over the coming months.
Prices
Health and property insurance costs continued to rise.
However, the cost of other nonlabor inputs like freight,
steel, and lumber declined. Several contacts, most notably homebuilders, said construction input cost decreases
were slow to translate into realized savings. Fuel costs
rose, though shipping costs, while still elevated, fell
somewhat. Food prices increased. Pricing power diminished amid pushback from customers. The Atlanta Fed’s
Business Inflation Expectations survey showed yearover-year unit cost growth increased slightly to 3.2 percent, on average, in October, from 3.1 percent in September; firms' year-ahead inflation expectations for unit
cost growth declined slightly in October to 2.4 percent,
on average, from 2.5 percent in September.
Tourism and hospitality contacts characterized leisure
and group travel to the District as healthy. However,
some noted mounting levels of uncertainty among travelers as indicated by shorter booking windows. Spending
on merchandise, food, and services in hotels decreased
compared with year-earlier levels. On balance, contacts
described the environment as continuing to normalize
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Federal Reserve Bank of Atlanta
capital.
and remain cautiously optimistic into the first quarter of
next year.
Energy
Construction and Real Estate
Demand for fuel picked up over the reporting period
compared with a year ago, as more employees returned
to the office and business travel improved. Mid-level fuel
demand increased, with contacts speculating that drivers
of luxury vehicles were trading down from premium
grade gasoline. Fossil fuel companies continued to invest heavily in charging stations in preparation for increased electric vehicle (EV) usage. Demand for electricity shifted from residential to commercial with more employees in office, and industrial electricity demand began
to move from chemical, paper, and housing-related
industries to data centers and battery and EV manufacturing. Demand for chemical intermediate products remained sluggish.
Home sales throughout the District remained constrained
amid higher prices and volatile interest rates. Home
purchases by repeat buyers contracted the most, as
many who were locked in at low interest rate mortgages
remained disincentivized to re-enter the market. Though
moderating, house prices in most markets were at or
near peak levels. Price growth was strongest in South
Florida. Rising homeowners’ insurance premiums have
become a major expense, especially for homeowners
with lower and/or fixed incomes. Home builder sentiment
deteriorated amid declining affordability. Builders experienced more challenges qualifying buyers. Incentive
offers, such as rate buy downs, remained prevalent.
Agriculture
Commercial real estate (CRE) contacts reported diminishing conditions across the sector. In addition to the
office segment, high-end multifamily and industrial real
estate were noted as areas of distress. Contacts reported concerns regarding financing, as most lenders increased underwriting standards and reduced funding
commitments. A growing wave of CRE loan maturities
and declining asset values are significant downside risks
to the CRE outlook.
Demand for agriculture rose slightly in recent weeks.
Recent cattle herd liquidation constrained the supply of
beef, driving prices up. Meanwhile, the supply of dairy
was down as high beef prices led to an increase in dairy
cows being slaughtered, resulting in higher dairy prices.
Poultry farmers expressed growing optimism as stronger
demand allowed some to turn a profit again after losing
money amid low prices. Most row crops produced strong
yields, but demand for cotton remained low. ■
Transportation
Transportation activity remained weak. Freight forwarders noted double-digit declines in year-over-year average daily volumes, citing downturns in exports and lower
consumer spending. Railroads reported increases in the
total number of carloads, but softness in intermodal
freight. Some ports noted an increase of cars shipped in
containers due to capacity constraints on roll-on, roll-off
vessels; overall cargo volumes declined. Inland waterway activity was characterized as back to pre-pandemic
levels. Trucking contacts reported a drop in consumerdriven freight and characterized the 2023 peak season
as “non-existent” for parcel carriers. Insurance and regulation costs, along with the current geopolitical environment, were cited as significant longer-term risks.
Banking and Finance
Conditions at District financial institutions remained
sound. Loan growth was flat for most portfolios. Asset
quality was stable with low levels of nonperforming loans
as a percentage of total loans, despite an uptick in credit
card and auto delinquencies. Institutions relied on
noncore funding sources, such as large time deposits,
while reducing borrowings. Net interest margins remained compressed given high funding costs, and some
financial institutions sought cost savings to improve
earnings. Securities portfolio losses remained a drag on
For more information about District economic conditions visit:
www.atlantafed.org/economy‐matters/regional‐economics
F-2
Federal Reserve Bank of
Chicago
The Beige Book ■ November 2023
Summary of Economic Activity
Economic activity in the Seventh District was up slightly overall in October and early November. Contacts generally
expected a small decline in demand over the next year and many continued to express concerns about the potential for
a recession. Employment increased moderately; business spending was up slightly; nonbusiness contacts saw little
change in activity; consumer spending and construction and real estate activity decreased slightly; and manufacturing
was down modestly. Prices and wages rose moderately, while financial conditions tightened slightly. Expectations for
farm incomes in 2023 were little changed.
Labor Markets
Consumer Spending
Employment rose moderately over the reporting period
and contacts expected a similar rate of increase over the
next 12 months. Some manufacturers continued to have
difficulty finding workers, particularly higher skilled ones.
However, there were also signs that the labor market
was cooling. Some contacts said their applicant pools
had grown and that turnover had declined. And some
contacts in construction, real estate, and finance reported taking down job postings, while others in those sectors were planning for layoffs. Wage and benefit costs
rose moderately, but several contacts said wage pressures had cooled.
Consumer spending decreased slightly on balance over
the reporting period. Nonauto retail spending was up
slightly. Contacts highlighted higher spending on luxury
items, new product lines, lower-priced items at outlet
stores, and at e-commerce websites. However, a processor of product returns reported that returns of clothing
and electronics were down, which is an indicator of lower
sales of those items. In the leisure and hospitality sector,
spending fell on air travel and hotels. Light vehicle sales
decreased modestly overall. New vehicle sales were
down but held up better than expected in light of the
UAW strike, with several dealers commenting they saw
little effect from the strike. Used vehicle sales fell. Contacts noted that lower-end used vehicles were selling
faster than higher-end models.
Prices
Prices rose moderately in October and early November
and contacts expected a similar rate of increase over the
next 12 months. Nonlabor costs were up moderately, in
part because of increases in energy and shipping costs.
Some contacts noted that while they had fewer supply
chain issues, raw materials remained expensive. A few
producers said that they were getting more pushback on
price increases. Consumer prices moved up moderately
due to solid demand and the passthrough of higher
costs.
Business Spending
Business spending increased slightly in October and
early November. Capital expenditures moved up slightly,
with several contacts reporting purchases of new software. That said, a number of contacts said higher interest rates and tighter lending standards were leading
them to hold off on investments until credit conditions
loosen. Demand for heavy truck transportation services
declined moderately. Residential and commercial electricity usage decreased modestly, but industrial electricity
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Federal Reserve Bank of Chicago
consumption was up some, with one contact noting an
increase after the end of the UAW strike. Inventories for
most retailers were near desired levels. According to
contacts, the UAW strike had little effect on overall auto
inventories. In manufacturing, inventories were generally
a little high. Most contacts noted fewer input shortages
overall, though some remained, including for specialty
electrical and polymer components.
Agriculture
Projected farm income in the District was little changed
over the reporting period as both expenses and expected revenues moved lower. Despite widespread
drought, there were reports of record yields across multiple states and crop types, including corn, soybeans,
tomatoes, and wheat. One contact mentioned that early
and dry spring planting contributed to better-thanexpected crop yields. Corn and soybean prices dropped
to their lowest levels in over two years, while wheat
prices were flat. Costs were lower for key crop inputs,
including fuel and fertilizer. Egg prices edged up, milk
prices were flat, and butter prices were down. Cattle and
hog prices both declined.
Construction and Real Estate
Construction and real estate activity decreased slightly
on net over the reporting period. Residential construction
was down slightly with demand for major remodeling
projects falling substantially. According to a survey,
homebuilders were more pessimistic about activity in the
coming months than they had been earlier in the year.
Residential real estate sales decreased slightly, while
continued low home inventories supported a slight increase in prices and rents. Nonresidential construction
activity was unchanged as were prices of new construction. Contacts again reported that high interest rates
were forcing previously financially viable projects to be
delayed indefinitely. Commercial real estate activity
declined slightly, though vacancy rates and the availability of sublease space also fell. Prices and rents edged
down. One contact reported that while leasing activity
had held up, sales activity had fallen off.
Community Conditions
Community, nonprofit, and small business contacts
reported little change in economic activity from a robust
level. State government officials saw some decline in tax
revenues but continued low demand for unemployment
insurance. Small business owners reported that high
labor and capital costs were eroding profit margins.
Nonprofit contacts were experiencing ongoing high demand for services, especially at food pantries, and expressed concern about lower levels of private funding,
delayed receipt of public funding, and the end of COVIDera government support. Heading into the winter months,
low- and moderate-income consumers were “piecing it
together” to meet their needs for winter clothing in anticipation of higher housing, food, and heating costs. ■
Manufacturing
Manufacturing demand decreased modestly overall.
Steel and fabricated metals orders ticked down, with
contacts highlighting lower sales to the construction,
automotive, and medical sectors. Machinery sales were
down modestly, in part because of fewer sales to the
automotive sector. Auto production declined on average
over the reporting period, largely because of the UAW
strike. Heavy truck demand decreased modestly.
Banking and Finance
Financial conditions tightened slightly on balance in
October and early November. Bond and equity values
were up some, while volatility fell. Business loan demand
decreased modestly, and loan quality was also down,
with contacts highlighting struggles in the commercial
real estate sector. One contact noted loan quality improvements in hospitality. Business loan rates increased
modestly, and standards tightened slightly. Consumer
loan demand fell modestly across most segments. Some
contacts noted that home equity lending was up because
consumers were avoiding mortgage refinancing. Consumer loan quality decreased slightly, notably in credit
card lending. Consumer loan rates increased modestly,
and standards tightened slightly.
For more information about District economic conditions visit:
chicagofed.org/cfsec
G-2
Federal Reserve Bank of
St. Louis
The Beige Book ■ November 2023
Summary of Economic Activity
Economic activity has slowed slightly since our previous report. Labor markets remained tight, but reports of easing
continued. An increased share of contacts reported holding wages flat. Prices rose moderately, though businesses
continued to report consumer price sensitivity. Retailers and freight transport contacts reported slowing demand, particularly for high-end goods, but hospitality and travel contacts saw steady growth. Construction activity slowed, especially
for multifamily projects, many of which have been delayed or cancelled due to higher interest rates. Loan demand fell,
and delinquencies ticked up above pre-pandemic rates. The general outlook for the regional economy weakened slightly
due to concerns about future demand.
ly increase prices. Among respondents who do not plan
to fully pass on costs to consumers, two main reasons
stood out: First, some previous price increases were
enough to cover more-recent cost increases. In an effort
to raise prices less frequently, some businesses hedged
by implementing larger increases earlier in the year. For
example, an Arkansas brewer reported that they incorporated potential future volatility in input costs in past price
increases. Second, increased consumer sensitivity to
price increases has lessened businesses’ ability to raise
prices. Some items, such as luxury handbags and
watches, have seen price decreases of about 15%.
Labor Markets
Employment has remained unchanged since our previous report. Labor mismatches and struggles replacing
departing employees have contributed to a tight labor
market, but reports of easing have continued. Some
contacts reported that availability of skilled workers
remains a top issue, while others reported a more stable
labor force for the first time in a few years. Staffing contacts reported clients are staying at jobs and less prone
to leave than they were last year.
Wages have continued to grow slightly since our previous report, with an increased share of contacts reporting
that wages remain level. A manufacturing contact in
Evansville noted that hourly wages have risen only
slightly, but an increase in overtime pay due to labor
shortages has driven up labor costs. Several hiring
contacts in St. Louis reported wage growth has slowed
or reverted to pre-pandemic trends and fewer prospective employees have successfully negotiated for higher
wages.
Consumer Spending
District general retailers, restaurant, and hospitality
contacts reported mixed business activity since our
previous report. In general, auto dealers reported a
decline in business activity. Louisville auto contacts
reported that higher interest rates have slowed consumer demand for new car purchases. October real sales tax
collections increased in Kentucky, Missouri, and Western
Tennessee relative to September and decreased in
Arkansas. A Little Rock pawn shop noted that, while
sales over the past 18 months have been at high volumes historically, sales have slowed in recent months. A
Memphis hospitality contact noted that hotel occupancy
rates have been consistent compared with the same 6-
Prices
Prices have increased modestly since our previous
report. Although approximately three-quarters of contacts reported higher labor and nonlabor input costs,
many businesses are choosing to maintain or only slight-
H-1
Federal Reserve Bank of St. Louis
month period last year.
construction has all but stopped for developments aside
from single-family housing. While the number of ongoing
projects remains high, contacts with a strong existing
project pipeline have reported slowing demand for future
projects.
Manufacturing
Manufacturing activity growth has declined slightly since
our previous report. In Arkansas and Missouri, firms
reported slight decreases in production and employment
and slight increases in delivery lead times and new
orders. Missouri reported a slight decrease in inventories, while Arkansas saw a very slight increase. Higher
interest rates and the auto worker strikes impacted deliveries of some products for local automotive markets. On
average, firms reported they expect slight decreases in
production, capacity utilization, and new orders in the
coming quarter.
Banking and Finance
Activity in the banking sector has slowed modestly since
our previous report. A survey of contacts found that,
overall, credit card and commercial and industrial loans
all show signs of modest decreases in demand. Mortgage loan demand moderately declined due to high
mortgage rates and low housing inventory, making housing affordability beyond the reach of many buyers. Contacts across the District reported that profit margins are
tightening due to higher interest expenses. Consumer
delinquencies continue to rise and are being closely
monitored by banking contacts, who report they are
returning to and in some cases exceeding pre-pandemic
levels. Overall, banks continue to report stable conditions due to low credit risk and high asset quality.
Nonfinancial Services
Activity in the nonfinancial services sector has cooled
since our previous report. Overall, sales and sales expectations were the same or slightly lower, and the general outlook was slightly worse. A Louisville tourism
contact reported postponing capital expenditures because of flagging demand but also reported local growth
in the hospitality industry. A St. Louis tourism contact
reported continued investment and expressed hope that
the local economy would be somewhat insulated from
economic challenges faced by more expensive areas. A
Memphis freight contact echoed the sentiment of low
demand, which, coupled with overbuying during the
COVID pandemic, has contributed to slow reduction of
inventory. A St. Louis transportation contact reported
stable demand from ongoing customers, but less new
client acquisition. A Little Rock healthcare provider reported lower sales expectations and a worsening outlook.
Agriculture and Natural Resources
Agriculture conditions have improved slightly since our
previous report. Yields for the District’s primary commodity crops were at or moderately below 2022 levels. Despite this slight decline, total corn production in the District rose relative to last year. Rice production also rose,
reaching levels over 33% higher than in 2022, while
soybean production dipped slightly below 2021-22 levels
and cotton production returned to 2021 levels. Commodity crop prices fell but remained at or above typical levels
for the 2015-2020 period and stayed relatively stable
throughout the reporting period. District contacts reported a mixed outlook but were generally less pessimistic
than in previous reports. A Louisville contact attributed
the moderate improvement in outlook to higher-thanexpected yields and prices for crops such as corn and
soybeans. ■
Real Estate and Construction
Residential rental prices across the District have remained unchanged since our previous report. In the
Louisville, Memphis, and Little Rock MSAs, pending
sales and houses off the market in two weeks have
fallen since our previous report, while inventory and
months of supply for residential real estate have increased. Contacts reported high mortgage rates continuing to constrain demand for buying homes. In commercial real estate, strong demand for office space continues to be focused on Class A buildings, while vacancies
remain high for Class B and C office space.
Commercial construction has slowed sharply since our
previous report, particularly for new starts in the warehouse and industrial sectors. Residential construction
has also seen slowing activity, with some projects sidelined or cancelled, especially for multifamily. One Memphis commercial real estate contact reported that new
H-2
Federal Reserve Bank of
Minneapolis
The Beige Book ■ November 2023
Summary of Economic Activity
Economic activity in the Ninth District was flat to down slightly since the previous report. Employment grew modestly,
but job openings declined. Wage pressures were unchanged but ongoing wage growth remained above average, while
price pressures were modest. Growth was noted in some areas of construction, but residential construction was slow,
and manufacturing also fell slightly. Consumer spending was flat. Agriculture weakened as farm incomes softened, and
energy exploration was unchanged. Minority- and women-owned businesses reported steady activity.
Labor Markets
Prices
Employment grew modestly since the last report. But
there was variation among sectors, some of which had
increased layoffs. Labor demand was positive overall but
somewhat lower than earlier in the year. Some contacts
reported that they were not replacing workers who had
left, or were eliminating open positions. Strong labor
demand was reported by health care and finance firms,
while hiring sentiment was softer in other sectors,
including manufacturing. More than half of construction
contacts were hiring, though many were attempting to fill
turnover; the share that was not hiring grew, and one in
seven was cutting workers. Expected labor demand for
the coming months was moderately positive overall.
Among those planning to hire, a notable share cited
overworked staff as an important factor for doing so.
Price pressures increased modestly since the last report.
Slightly fewer than a quarter of firms responding to an
October business conditions survey indicated that their
prices charged to customers increased from the month
prior, while 15 percent said they reduced their prices. A
larger share reported that their nonlabor input prices
increased. Administrative contacts reported an increase
in the price of office supplies. A regional food producer
said that milk and cheese prices declined recently. Retail
fuel prices in District states decreased briskly since the
previous report.
Worker Experience
In a recent survey, half of employed respondents
expressed satisfaction with their current job, wages, and
company culture. The other half of respondents were
looking for new opportunities and hoping to increase
their earnings, but they categorized potential
opportunities as average at best. Job seeking
respondents cited bad job options, lack of response from
potential employers, and unreasonable skill or
experience expectations as the top three factors
preventing them from reaching their objectives. A worker
highlighted that starting pay was "far too low" despite his
experience in a variety of trades. Another worker
expressed frustration with college education
Wage pressures were unchanged since the last report,
but ongoing wage growth remained above average. A
general survey of District firms found that about 30
percent were raising wages by more than usual, while a
similar share reported raising wages by less than usual
or not at all. A survey of construction firms found that
about 70 percent had increased wages by at least 3
percent over the last year despite some evidence of
recent sectoral slowing. Expectations of future wage
increases were similar to the sentiment six months ago.
I-1
Federal Reserve Bank of Minneapolis
requirements, saying that "most companies are not
willing to compensate for years of service without a
degree.”
Manufacturing
District manufacturing activity decreased slightly since
the previous report. Manufacturing respondents to an
October business conditions survey reported decreased
orders on balance relative to a month earlier, with
expectations for a further decrease in the month ahead.
A regional manufacturing index indicated increased
activity in North Dakota and South Dakota in October
from a month earlier, while activity decreased slightly in
Minnesota. A custom manufacturer said recent sales
“dropped like a rock.” One contact reported that because
of the undersupply of workers to the sector, “thousands
of unfilled jobs would need to be eliminated before
anyone gets to layoffs.”
Consumer Spending
Consumer spending was flat since the last report.
Recent sales tax receipts in Minnesota were flat month
over month and year over year. Contacts reported that
consumers have become more price sensitive for
everyday goods, with growing purchases at low-cost
retailers compared with premium ones. At the same
time, sales of some big-ticket items remained healthy. A
vehicle dealer with locations in multiple District states
saw October sales rise by 10 percent over last year. A
northern Wisconsin banker noted the disparate
tendencies. "People are mad about eggs costing more,
but they'll still buy a car.” Other banking contacts noted
increased use of credit card and home equity lines of
credit to maintain spending levels. Tourism traffic in
Michigan’s Upper Peninsula remained robust this fall.
Hotel occupancy rates in Minnesota were notably higher
than a year ago, and lodging and accommodation fees in
Montana remained on par with last year’s record pace.
Agriculture, Energy, and Natural Resources
District agricultural conditions deteriorated slightly since
the last report. Despite better-than-expected crop
production, lenders responding to the Minneapolis Fed’s
third-quarter survey of agricultural credit conditions,
conducted in October, reported lower farm incomes and
capital spending over the period relative to a year earlier.
Contacts expressed concern over the impact of rising
interest costs as borrowing increases. District oil and gas
drilling activity was unchanged since the previous report.
Construction and Real Estate
Construction activity was flat overall since the last report,
with considerable variation among subsectors and some
concern for near-term activity. Firms involved with larger
industrial and infrastructure projects reported moderately
increased activity compared with last year, while firms in
the commercial and especially residential sectors saw
lower revenues over the same period. Contacts across
the sector noted that project backlogs had shrunk,
particularly for residential and commercial projects; new
projects out for bid had also fallen. As a result, activity
across the sector was expected to be lower over the
coming months compared with last year. However,
public sector projects remained healthy, and singlefamily permitting also increased in recent months in
some markets. In Minneapolis-St. Paul, October
permitted units doubled over the last year.
Minority- and Women-Owned Business Enterprises
Activity among minority- and women-owned business
enterprises (MWBE) was balanced overall, according to
respondents to a monthly survey. Roughly even shares
of respondents reported higher, unchanged, or lower
sales in recent weeks. Profit margins were lower for
more than half of respondents while capital expenditures
edged higher on balance. Hiring demand and staffing
levels were largely flat. Only a quarter of respondents
reported having increased their final selling prices, but
35 percent expected to increase them within the next
month. A Minnesota contact expected MWBE
construction companies to be disproportionately affected
as federal funding and high interest rates shift activity
from multifamily housing developments to infrastructure
projects. "The capital required for infrastructure projects
is greater than for vertical building. Lack of access to
banking capital continues to leave MWBE companies at
a disadvantage," they highlighted. ■
Commercial real estate fell modestly. Office space
remained challenging, with high vacancy rates because
large tenants continued to seek smaller footprints.
Multifamily vacancy rates have risen in many regions as
new units come to market; however, new developments
in this sector have slowed. Speculative development has
also slowed for industrial space as vacancy rates ticked
slightly higher, but from low levels. Residential real
estate remained subdued, with year-over-year sales
continuing to decline.
For more information about District economic conditions visit:
minneapolisfed.org/region-and-community
I-2
Federal Reserve Bank of
Kansas City
The Beige Book ■ November 2023
Summary of Economic Activity
Economic activity in the Tenth District declined slightly in recent weeks. Consumers were increasingly likely to “share a
roof and share meals” to manage household budget challenges. Demand for rental housing reportedly shifted away from
single-bedroom units toward multi-bedroom housing where rent expenses could be shared with a roommate. Similarly,
restaurateurs noted that revenues fell as more customers split dishes and eschewed expensive items. Manufacturing
businesses reported little change in activity, though some contacts noted a decline in their expectations of demand over
the medium term. Reports of planned capital expenditures were mixed depending on how directly businesses were supported by fiscal spending and municipal projects. Renewable energy activity in the Tenth District continued to expand at a
moderate pace, driven by modest growth in wind generation and robust growth in solar installations. The outlook for renewable energy remained positive, but contacts noted skilled labor shortages and limitations on interregional electricity
transmission as challenges. The agricultural economy and farm credit conditions in the District softened moderately.
Labor Markets
Prices
Labor conditions in the Tenth District remained mostly
unchanged over the past month. Hiring activity in the
service sector was mixed across segments. Transportation contacts reported robust employment growth while
most hotel contacts reported contractions in employment. Most contacts expected to increase hiring or maintain the size their workforce over the next year, citing
expected sales growth, overworked staff, and an ongoing need for workers with specific skills. Few businesses
laid off workers, but many contacts reported reducing
their workforce through natural attrition.
Prices grew at a moderate pace. While manufacturing
contacts witnessed a moderation in price pressures,
service firms are still facing higher prices due to tight
labor market conditions. Most firms reported plans to
raise prices in coming months. Contacts reported concerns about risks of higher commodity and energy prices. While higher interest rates are raising financing costs
for some companies, most District firms reported a majority of their funding coming from cash financing, insulating many District firms from the higher rate environment.
To build a skilled workforce, contacts noted raising wages for new hires, upskilling less-qualified workers, and
making increased efforts to retain existing employees.
Wages continued to grow at a moderate pace. Contacts
highlighted raising wages as central to their retention of
existing employees and attracting new hires over the
past few years. However, some contacts noted an increased number of potential hires have refused the
compensation packages offered, indicative of ongoing
tightness in the labor market.
Consumer spending declined slightly in recent weeks.
Contacts suggested consumers were increasingly likely
to “share a roof and share meals” to manage household
budget challenges. Specifically, contacts in multifamily
housing reported demand for single-bedroom units softened, shifting toward demand for multiple bedrooms as
more renters sought to share rent expenses with roommates. Restaurant owners similarly reported that, while
patronage was steady, revenues fell as more customers
shared plates and avoided higher cost items. Leisure
travelers accounted for a smaller share of hotel stays.
Consumer Spending
J-1
Federal Reserve Bank of Kansas City
Community Conditions
Community and Regional Banking
Organizations serving low- and moderate-income (LMI)
populations reported LMI households have largely spent
down any savings and are increasingly turning toward
credit cards to make ends meet. More households were
skipping car payments, rationing medication, and moving
in with other families to cut back on expenses. Organizations noted that while most industries have increased
wages recently, the growth in earnings at LMI households was insufficient to offset recent and ongoing inflation. As a result, non-profits were experiencing substantially higher demand for assistance. They reported struggling to meet that demand due to decreasing donations.
Loan demand remained tepid at banks across the District as lenders continued to focus on maintaining sound
credit quality, while higher rates exerted pressure on
customer demand for credit. Though standards across
loan types remained unchanged, several contacts expected further deterioration in credit quality over the next
six months, particularly in the consumer and commercial
real estate segments of their portfolios. Bankers cited
higher debt service costs and declining borrower cash
flow as key risks facing their CRE books, particularly for
loans maturing in the near term. Rising funding costs
persisted as deposit balances continued to shift to higher
-yielding accounts, with contacts reporting strength in
time deposit products.
Manufacturing and Other Business Activity
Overall business activity declined slightly last month.
Contacts in retail and tourism reported moderate declines in sales and revenues. Hoteliers reported occupancy levels remained steady but noted an increase in
stays related to business travel. This shift in traveler type
raised some concerns regarding future demand, as
business travelers are reportedly more sensitive to price
and business cycle fluctuations. Contacts in healthcare
reported a somewhat lower outlook for use of services
through the end of year. With greater enrollment in highdeductible health insurance plans in 2023, more households have yet to meet their deductible despite being late
in the year and may forgo care requiring out-of-pocket
payment. Manufacturing businesses reported little
change in activity, though some contacts noted a decline
in their expectations of demand over the medium term.
Planned capital spending was mixed across segments
with manufacturers reporting softening investment activity. Contacts noted the emergence of a firm-specific
dichotomy whereby businesses that obtained government or defense contracts are fueling the majority of
capital expenditure activity.
Energy
Renewable energy activity in the Tenth District continued
to grow at a moderate pace, driven by modest growth in
wind generation and robust growth in solar installations.
Expectations were for a continued moderate pace of
growth going into next year, driven mostly by wind generation. While growth in renewable energy in the District
is expected to be slightly behind the U.S., Kansas and
New Mexico are slated to outpace the U.S. average in
coming months. Contacts in the renewable energy sector
highlighted acute skilled labor shortages and limitations
on interregional electricity transmission as key challenges. While higher interest rates are adding to the renewable development costs, most of those higher costs are
being passed onto consumers in the form of higher
electricity rates. Contacts highlighted the significant
boost to renewable development activity expected in the
coming years from fiscal stimulus spending, equating
that spending to “throwing gasoline on an already raging
fire.”
Agriculture
Real Estate and Construction
The agricultural economy and farm credit conditions in
the District softened last month alongside a moderate
decrease in agricultural commodity prices. Agricultural
bankers reported borrower liquidity deteriorated slightly
from strong levels, and loan repayment rates were slightly lower than a year ago. Farm income declined faster in
areas with more intense drought and more corn and
wheat production. Agricultural real estate values remained firm. Cattle prices remained strong, supporting
credit conditions in other portions of the District. Contacts cited elevated production expenses and high financing costs as ongoing concerns. ■
Several developers and construction managers reported
raw materials costs stabilized recently. They also noted
greater ability to push against escalating costs from
subcontractors. Public sector funding for municipal projects sustained demand for building materials, somewhat
supporting materials prices. Contacts indicated that
subcontractors were becoming more available for work,
with holes in their backlog schedules for the first time in
several years. Though construction labor was somewhat
more available, growth in labor costs remain elevated.
J-2
For more information about District economic conditions visit:
www.KansasCityFed.org/research/regional-research
Federal Reserve Bank of
Dallas
The Beige Book ■ November 2023
Summary of Economic Activity
The Eleventh District economy expanded at slower pace than in the previous reporting period. Manufacturing output
rose, while growth in services stalled out and retail sales fell. Loan volumes declined at a faster rate than the previous
reporting period as credit conditions remained tight and the cost of credit high. Home sales decreased, and activity in
the energy sector was flat to up. Recent rains somewhat improved district agricultural conditions. Local nonprofits continued to cite broad based increases in demand for assistance. Employment was little changed, and wage growth continued to normalize. Input cost and selling price growth were above average in the service sector but modest to slight in
manufacturing, construction, and energy. Outlooks remained negative with geopolitical instability, heightened macroeconomic uncertainty, and the high cost of credit cited as key headwinds.
construction, manufacturing, and energy. Growth in
airfares eased amid increased capacity, and fuel costs
ticked up. Construction materials, home, and land prices
were mostly unchanged but elevated. Freight shipping
rates fell, and a transportation firm reported that companies were signing longer-term freight contracts due to
low rates. Numerous firms cited higher borrowing costs
as an impediment to business growth.
Labor Markets
Employment expanded slightly over the past six weeks.
The pace of hiring decelerated broadly, and some freight
carriers, high-tech, and manufacturing companies reported layoffs. A few service firms said they were keeping
staff on payrolls despite a notable drop in sales, though
one respondent said they plan to cut salaries in early
2024 to avoid layoffs. Labor availability improved and
reports of labor shortages were less prevalent. One
staffing firm said they were more comfortable letting
unproductive workers go since they felt more confident
about replacing them. However, shortages of engineers,
restaurant workers, and specialty construction labor
persisted.
Manufacturing
Texas manufacturing activity expanded modestly in
October. In durables, production increases were led by
fabricated metals and machinery manufacturing. However, output in transportation equipment manufacturing
declined, and a contact noted that the UAW strike somewhat hurt sales. Output rose in nondurable manufacturing. Chemical production was mixed, and refinery activity
decreased. Overall, manufacturing outlooks worsened,
and uncertainty remained elevated with several contacts
citing geopolitical instability and high interest rates as
headwinds.
Wage growth continued to normalize, though it was still
slightly elevated. Homebuilders noted some reprieve in
labor costs, and energy companies said wage growth
was slowing with pressures limited to select job categories. However, a fabricated metal manufacturer reported
paying workers for 40 hours/week though the firm did not
have enough work to keep them busy. Most staffing
firms saw continued upward wage pressures, though
one contact anticipates some easing in the first half of
2024 as hiring is expected to slow.
Retail Sales
Retail sales declined during the reporting period. Some
retailers attributed the weakness in spending to elevated
economic uncertainty and high interest rates. Reduced
affordability resulting from higher car prices and interest
rates also depressed auto sales over the past six weeks.
Overall, retail inventories dipped for the first time since
Prices
Input cost and selling price growth was mixed, still slightly elevated in the service sector but generally modest in
K-1
Federal Reserve Bank of Dallas
mid-2022, and outlooks remained negative.
ing loan demand, and worsening business activity over
the next six months.
Nonfinancial Services
Energy
Service sector activity held steady during the reporting
period. Overall, revenues were flat on net, with numerous firms pointing to heightened macroeconomic and
geopolitical uncertainty and high interest rates as factors
impacting demand. Revenues were flat to down in several industries, including transportation and warehousing
and professional and business services but rose in
healthcare. Leisure and hospitality firms said revenues
continued to soften partly due to slower consumer
spending and high economic uncertainty, and one contact said their expansion plans were on hold until yearend 2024. Staffing firms cited a slowdown in demand for
their services, as demand for high-skilled workers weakened while placements for support staff and low-skilled
workers remained stable. Airlines saw strong activity.
Domestic leisure travel activity cooled, but international
leisure travel stayed strong. Business travel was stable
but trailed pre-pandemic levels.
Oil field activity was flat to up over the past six weeks.
The recent spate of mergers and acquisitions continued
to put slight downward pressure on activity levels. Orders for oilfield services equipment were stable as customers limited spending to maintaining current capacity.
In 2024, capital expenditure growth in oil and gas production is anticipated to be concentrated in international
offshore drilling, with only modest increases expected in
U.S. production-related work.
Agriculture
Recent rainfall improved soil moisture over the past six
weeks, though much of the District remained in drought.
Crop production was substantially higher this year
across the board—wheat, cotton, corn, sorghum, and
soybeans—largely due to drought conditions being less
severe than last year, particularly in the Texas panhandle. Cattle prices declined over the reporting period but
remained elevated, and contacts noted a continued tight
supply of cattle and resilient demand for beef amid high
prices.
Construction and Real Estate
Housing demand weakened during the reporting period.
Home sales and buyer traffic fell while cancellations
rose, and contacts pointed to higher mortgage rates as
the key factor impacting activity. Buyer incentives including rate buydowns and discounting remained widespread, and there were reports of additional incentives
being offered to discourage buyers from cancelling contracts. Outlooks were weak and contacts noted reduced
affordability, high mortgage rates, and tighter lending for
construction and development loans as headwinds.
Community Perspectives
Demand for nonprofit services rose broadly, and contacts expected further increases in requests for assistance with the holiday season approaching. Affordable
housing continued to be a pressing concern not just for
low-income households but for some seniors too, and
one nonprofit said that even with housing vouchers they
were facing difficulty finding units for their clients. Moreover, finding developers to build subsidized housing was
difficult. Sunsetting of various COVID relief funds has
posed several challenges, particularly for childcare centers. Contacts noted that multiple daycare centers had
closed. Demand for food assistance has accelerated
since spring 2023. Nonprofits noted challenges in meeting their fundraising goals, which some attributed to
donor fatigue. ■
Activity in commercial real estate softened. Apartment
leasing slowed and rents were flat to down. Office leasing remained minimal; vacancy rates were high, and
concessions remained generous. With new supply outpacing demand, industrial vacancy rates ticked up and
rent growth cooled. Heightened macroeconomic uncertainty, high capital costs, and diminished appetite to lend
continued to deter investment across property types.
Financial Services
Overall loan volume declined at a faster pace over the
past six weeks, led by a sharp decline in residential real
estate lending. Loan demand has been falling for over a
year, though the pace of decline has eased. Credit
standards continued to tighten, and loan pricing continued to rise at an above-average pace this period. Driven
by a marked increase in consumer loan delinquency,
overall loan nonperformance rose at its highest rate
since 2020. Bankers remained pessimistic, with expectations of further increases in loan nonperformance, declin-
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 2023
Summary of Economic Activity
Twelfth District economic activity softened slightly during the October to mid-November reporting period. Labor market
tightness eased moderately, and employment levels remained generally steady. Wages and prices rose at a slower
pace relative to the previous reporting period. Retail sales were flat, and activity in the services sectors picked up slightly. Demand for manufactured products remained largely unchanged, while conditions in agriculture and resource-related
sectors were mixed. Residential real estate activity softened, while activity in commercial real estate was varied. Conditions in the financial sector weakened further, and lending standards remained tight. Communities across the Twelfth
District saw continued high demand for support services that was harder to meet due to declining charitable donations.
Contacts expressed concern over a weaker economic outlook and increased overall uncertainty.
Labor Markets
union negotiations.
Labor market tightness continued to ease over the reporting period. Many employers reported improved availability and retention of workers in recent weeks as well
as an uptick in job applications. Some employers, citing
an uncertainty over the economic outlook, held staffing
levels steady and only filled positions that opened up
due to turnover. Employers in industries, such as legal
services and aerospace, expanded their workforce in
recent weeks, while some in manufacturing and financial
services reported reductions in staffing. Nevertheless,
employee turnover was reportedly elevated in hospitality
and manufacturing. Several contacts expected the recent tentative agreement surrounding strike actions in
the entertainment industry will bring back a significant
number of workers in coming months.
Prices
Prices remained elevated but rose at a slower pace
relative to the previous reporting period. The recent drop
in energy prices and signs of potential tapering overall
demand growth helped alleviate some price pressures in
recent weeks. Several contacts reportedly reduced fees
for professional services in response to lower demand.
Still, material and insurance costs continued to rise. In
some instances, these costs were passed on to consumers, although one contact observed some pushback from
customers to higher menu prices. Real estate firms
noted that higher input, building, and loan costs adversely impacted new construction projects.
Community Conditions
Community and support organizations continued to
report strained resources and elevated demand for services. Higher numbers of individuals across the District
sought support for housing, health, and mental health
services. Demand at food banks also increased. Charitable donations by corporations and households declined
further, though assistance from government funding
aided some nonprofit organizations. At the same time,
support organizations reported higher expenses, including for insurance and business software. Small business-
Wage growth moderated across sectors as imbalances
in labor market conditions for supply and demand continued to improve. Contacts reported budgeting annual pay
raises in line with pre-pandemic rates. Recent layoffs in
the financial services sector reportedly put downward
pressure on wages within the sector. Wage pressures
remained high for employers in legal services and some
high-skilled trades across sectors. Some contacts highlighted upward wage pressures from the increases in
minimum wages happening locally and ongoing labor
L-1
Federal Reserve Bank of San Francisco
retail sectors was solid but showed some signs of easing
in recent weeks, and exports for some products such as
nuts rose. Producers commanded lower prices for products such as fish and nuts and expected apple prices to
fall due to the strong harvest. Costs for fuel, packaging,
labor, and equipment rose, while irrigation and international shipping costs declined. One contact in Utah cited
notable reductions in the cost of feeding livestock as
ample growth of grasses on grazing lands lowered demand and prices for hay.
es in urban areas were challenged by high borrowing
costs along with weaker consumer demand while widespread remote or hybrid work arrangements continued.
Retail Trade and Services
Retail sales were flat overall in recent weeks. Reports
suggested some pullback in consumer spending on bigticket items, such as motor vehicles. Demand was
stronger for some product categories, such as groceries,
fresh produce, and seafood. Retailers expected a solid
holiday shopping season but noted that more discounts
and offers than last year will be needed to entice consumers. Contacts in Alaska and Hawaii mentioned that
despite a recent push to support local and small businesses, consumers still prefer online shopping during the
holiday season.
Real Estate and Construction
Conditions in the residential real estate sector softened
further over the reporting period. Asking and selling
prices for single-family homes declined as buyers were
deterred by high mortgage rates, and demand from firsttime homebuyers was particularly weak. Inventories
remained low, and properties took longer to sell. Contacts reported slight softening in the multifamily sector
with lower occupancy rates in some downtown high-rise
buildings and slower rent growth. In contrast, a Southern
California contact noted continued strong demand for
affordable multifamily units. New residential construction
was stable, while renovation construction rose as homeowners sought to modify existing homes rather than buy
new ones.
Activity in consumer and business services picked up
slightly. Demand for leisure travel increased in recent
weeks and was expected to rise further for the holiday
season. Businesses across southern Nevada, particularly in leisure and hospitality, experienced unusual growth
in the weeks leading up to the Formula One Grand Prix
event in Las Vegas. Business demand for information
technology, custodial, and security services increased,
while demand for consulting services was down. Several
contacts expected the end of strike actions in the entertainment industry to spur growth in the Southern California economy, although some feared that many local
businesses and services providers would be unable to
recover losses for an extended period.
Commercial real estate activity was varied in recent
weeks. Office leasing activity was muted, and occupancy
rates remained low. In contrast, demand for space in
sectors less conducive to remote work, such as defense
and lab-based sciences, was robust and occupancy
rates were high. Elevated financing costs and economic
uncertainty slowed commercial construction projects. A
contact in Utah reported that construction continued as
planned on existing industrial projects, but that rent
growth in this sector began to ease.
Manufacturing
Manufacturing activity was unchanged at robust levels in
recent weeks. Manufacturers reported continued general
strength in the sector and solid demand for heavy machinery, capital equipment, and fabricated metal products. The aerospace industry reportedly saw an uptick in
orders in recent weeks. Food manufacturing and packaging continued to operate at or near capacity. Reports
indicated continued improvements in raw materials availability and supply chains, although some manufacturers
mentioned lingering delivery delays.
Financial Institutions
Lending activity weakened further in recent weeks. High
financing costs pushed more firms to delay or cancel
projects and planned investments. Demand for mortgages remained muted as higher rates and limited supply
continued to constrain the housing market. In contrast,
consumer lending was solid, and reports indicated an
uptick in demand for new credit cards and lines of credit
despite the increase in rates and fees. Competition for
deposits remained brisk, lending standards remained
tight, and credit quality was strong. ■
Agriculture and Resource-Related Industries
Conditions in the agriculture and resource-related sectors were mixed. Across the District, crop yields were
generally at or above historical averages, particularly for
apples. Domestic demand from the food services and
L-2
Cite this document
Federal Reserve (2023, December 12). Beige Book. Beige Book, Federal Reserve. https://whenthefedspeaks.com/doc/beige_book_20231213
@misc{wtfs_beige_book_20231213,
author = {Federal Reserve},
title = {Beige Book},
year = {2023},
month = {Dec},
howpublished = {Beige Book, Federal Reserve},
url = {https://whenthefedspeaks.com/doc/beige_book_20231213},
note = {Retrieved via When the Fed Speaks corpus}
}