Economic activity increased slightly to moderately across the 12 Federal Reserve districts in late November and December, said the Federal Reserve’s Beige Book Wednesday, which outlines the US economy eight times a year.
CONSUMER SPENDING UP
Consumer spending moved up moderately, with most districts reporting strong holiday sales that exceeded expectations, the Beige Book said. Vehicle sales grew modestly.
Construction activity decreased overall, with several districts indicating high material and financing costs were weighing on growth, the Beige Book said. Manufacturing decreased slightly on net, and a number of districts said manufacturers were stockpiling inventories in anticipation of higher tariffs.
Residential real estate activity was unchanged on balance, as high mortgage rates continued to hold back demand, the Beige Book said. Commercial real estate sales edged up.
NONFINANCIAL SERVICES GROW
The nonfinancial services sector grew slightly overall, with districts highlighting growth in leisure, hospitality and transportation, notably air travel, the Beige Book said. Truck freight volumes, however, were down.
Financial service providers reported modest growth in lending and little change in asset quality overall, though lenders and community organizations voiced concerns about delinquencies among small businesses and lower-income households, the Beige Book said.
Nonprofit social service agencies faced high demand amid uncertainty about future funding levels, the Beige Book said.
AGRICULTURAL CONDITIONS WEAK
Agricultural conditions remained weak overall, with generally lower farm incomes and weather-related struggles in some areas, the Beige Book said. The spread of avian flu reduced egg supplies and pushed prices higher.
Energy activity was mixed, the Beige Book said. More contacts were optimistic about the outlook for 2025 than were pessimistic about it, though contacts in several districts expressed concerns that changes in immigration and tariff policy could affect the economy negatively.
LABOR MARKETS UP SLIGHTLY
Employment ticked up on balance, with six districts reporting a slight increase and six reporting no change, the Beige Book said. Contacts in several service industries, notably healthcare, continued to see job growth.
Construction employment increased slightly, while manufacturing employment was flat, the Beige Book said. Contacts across multiple sectors noted difficulty finding skilled employees, and reports of layoffs remained rare, the Beige Book said.
However, contacts in some districts expressed greater uncertainty about their future staffing needs, the Beige Book said. Wage growth picked up to a moderate pace in most districts, though there were some reports that wage pressures had eased.
PRICES UP MODESTLY
Prices increased modestly overall, with growth rates ranging from flat to moderate, the Beige Book said. Contacts in most districts reported modest increases in selling prices, though there were instances of flat or decreasing prices as well, particularly in the retail and manufacturing sectors.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $199.88 per cwt to $208.09, compared with last week’s range of $197.00 to $201.40 per cwt. FOB dressed steers, and heifers went for $312.04 per cwt to $317.84, compared with $304.49 to $315.25.
The USDA choice cutout Wednesday was up $1.16 per cwt at $334.14 while select was off $0.67 at $318.04. The choice/select spread widened to $16.10 from $14.27 with 117 loads of fabricated product and 15 loads of trimmings and grinds sold into the spot market.
The USDA-listed weighted average wholesale price for fresh 90% lean beef was $346.38 per cwt, and 50% beef was $117.48.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.20 to $1.35 a bushel over the Mar corn contract, which settled at $4.78 3/4, up $0.04 1/4.
The CME Feeder Cattle Index for the seven days ended Tuesday was $278.04 per cwt, down $0.27. This compares with Wednesday’s Jan contract settlement of $275.22, up $1.12.