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Federal Reserve Reports ‘Slight or Modest Growth’ in Economic Activity

Economic activity in the United States expanded from early April to mid-May, though it varied in different industries and Federal Reserve districts.

While 10 of the 12 districts reported slight or modest growth, Boston and San Francisco said there was no change in activity, the Federal Reserve said Wednesday (May 29) in a national summary of its May 2024 Beige Book.

“Retail spending was flat to up slightly, reflecting lower discretionary spending and heightened price sensitivity among consumers,” the Fed said in the summary.

Demand for travel and tourism, nonfinancial services, and the services of nonprofits and community organizations were up during the period covered by the report. Auto sales were flat, and some districts said manufacturers were offering incentives.

Activity in transportation was mixed, with port and rail activity up but trucking and freight activity varying across districts. Manufacturing activity was also mixed, with most districts report it flat to up but two saying it declined.

“Tight credit standards and high interest rates continue to constrain lending growth,” the Fed said in the summary.

Rising rates were reported to be impacting housing sales, while tight credit conditions and elevated borrowing costs contributed to softening in the commercial real estate sector.

Energy activity was stable, while agricultural reports were mixed as drought conditions eased in some districts but concerns about farm finances and incomes remained.

“Overall outlooks grew somewhat more pessimistic amid reports of rising uncertainty and greater downside risks,” the Fed said in the summary.

As far as labor markets are concerned, most districts reported that employment rose at a slight pace, labor availability was better and wage growth remained moderate. Hiring plans were mixed, with some districts expecting continued modest growth and others seeing a pullback.

When it comes to prices, most districts reported that prices increased at a modest pace, that retailers were offering discounts to attract consumers and that input costs continued to increase.

“Contacts in most Districts noted consumers pushed back against additional price increases, which led to smaller profit margins as input prices rose on average,” the Fed said in the summary.

This report comes a day after the latest installment of the Conference Board Consumer Confidence Index reported that consumer confidence crept up in May, though worries about grocery prices and job prospects continue to weigh on Americans.

In another recent report, the Census Bureau said Friday (May 24) that new orders for manufactured durable goods increased by 0.7% in April, marking the third consecutive month of increases.