The U.S. economy continues to teeter between slight growth and slight contraction, propelled up by still vigorous consumer spending and weighed down by a weakening housing market, the Federal Reserve’s beige book indicated on Wednesday.
The Fed’s beige book is a complication of economic anecdotes collected by the 12 regional Federal Reserve banks. It is published a couple of weeks before the Federal Open Market Committee meets to assess the stance of monetary policy.
The Fed said that economic activity was “unchanged, on balance” since the last publication of the beige book in July. That report noted an increased risk of recession in several parts of the country and slowing demand growth.
The Fed said that five regional banks reported slight to modest growth and five reported slight to modest “softening.”
Contractions were reported by the New York Fed, the Chicago Fed, the St. Louis Fed, the Minneapolis Fed, and the Richmond Fed. Continued expansions were reported by the Atlanta Fed, the San Francisco Fed, the Kansas City Fed, The Boston Fed, and the Dallas Fed.
The Philadelphia Fed reported that activity “held steady.” The Cleveland Fed said business “activity steadied in the District, after slowing slightly in the prior reporting period.”
“Most Districts reported steady consumer spending as households continued to trade down and to shift spending away from discretionary goods and toward food and other essential items,” the Fed said.
The Fed said that housing market conditions “weakened noticeably as home sales fell in all twelve Districts and residential construction remained constrained by input shortages.”
Auto sales remained muted across the country, which the Fed said reflected limited inventories and elevated prices. Manufacturing activity grew in several parts of the country, although the Fed said that there were some reports of declining output as supply chain disruptions and labor shortages continued to hamper production.
There was some good news. The summer saw “solid” leisure travel activity with some areas seeing an uptick in business travel.
“Overall labor market conditions remained tight, although nearly all Districts highlighted some improvement in labor availability, particularly among manufacturing, construction, and financial services contacts,” the Fed said.
Wages rose in all 12 Fed districts, with some employers saying they were paying midyear bonuses and giving off-cycle raises to offset higher costs of living.
Price levels remained “highly elevated,” the Fed said. Nine of the regional Fed banks, however, reported some degree of moderation in the rate of price increases. “
“The outlook for future economic growth remained generally weak, with contacts noting expectations for further softening of demand over the next six to twelve months,” the Fed said.
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