Overall US economic activity increased slightly in early 2023, said the Federal Reserve’s Beige Book Tuesday.
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 mostly qualitative information from each district. It is published eight times a year.
ACTIVITY STEADY TO UP
Six districts reported little or no change in economic activity since the last report, while the other six indicated economic activity expanded at a modest pace, the Beige Book said. On balance, supply chain disruptions continued to ease. Consumer spending generally held steady, though a few districts reported moderate to strong retail sales growth during what is typically a slow period of the year.
Auto sales were little changed, on balance, though inventory levels continued to improve, the Federal Reserve said. Several districts indicated high inflation and higher interest rates continued to reduce consumers’ discretionary income and purchasing power, and some concern was expressed about rising credit card debt.
Travel and tourism activity remained fairly strong in most districts, the Beige Book said. Manufacturing activity stabilized following a period of contraction.
While housing markets remained subdued, restrained by exceptionally low inventory, an unexpected uptick in activity beyond the seasonal norm was seen in some districts along the eastern seaboard, the Federal Reserve said. Commercial real estate activity was steady, with some growth in the industrial market and ongoing weakness in the office market.
Demand for nonfinancial services was steady overall but picked up in a few districts, the Beige Book said. On balance, loan demand declined, credit standards tightened, and delinquency rates edged up.
Energy activity was flat to down slightly, and agricultural conditions were mixed, the Federal Reserve said. Amid heightened uncertainty, contacts did not expect economic conditions to improve much in the months ahead.
LABOR MARKETS
Labor market conditions remained solid, the Beige Book said. Employment continued to increase at a modest to moderate pace in most districts despite hiring freezes by some firms and scattered reports of layoffs.
Labor availability improved slightly, though finding employees with desired skills or experience remained challenging, the Beige Book said. Several districts indicated that a lack of available childcare continued to impede labor force participation.
While labor markets generally remained tight, a few districts said firms were becoming less flexible with employees and beginning to reduce remote work options, the Beige Book said. Wages generally increased at a moderate pace, though some districts said wage pressures had eased somewhat. Wage increases were expected to moderate further in the coming year.
Inflationary pressures remained widespread, though price increases moderated in many districts, the Federal Reserve said.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $164.79 to $166.59 per cwt, compared with last week’s range of $159.00 to $165.08. FOB dressed steers, and heifers went for $258.17 to $262.83 per cwt, versus $254.08 to $261.83.
The USDA choice cutout Thursday was down $0.18 per cwt at $284.60 while select was off $2.07 at $276.05. The choice/select spread widened to $8.55 from $6.66 with 72 loads of fabricated product and 15 loads of trimmings and grinds sold into the spot market.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.55 to $1.70 a bushel over the May corn contract. Bids in Kansas were steady at $0.75 over May, which settled at $6.11 1/2 a bushel, down $0.14.
The CME Feeder Cattle Index for the seven days ended Wednesday was $188.72 per cwt, up $0.39. This compares with Thursday’s Mar contract settlement of $193.07 per cwt, down $0.67.