Economic activity increased slightly to moderately across the twelve Federal Reserve districts in late November and December, said the Federal Reserve Bank’s Beige Book Wednesday.
The report, which is published eight times a year, went on to say consumer spending moved up moderately, with most districts reporting strong holiday sales that exceeded expectations.
OVERAL ECONOMIC ACTIVITY
Vehicle sales grew modestly during the period. Construction activity decreased overall, with several districts indicating high materials costs and financing were weighing on growth.
Manufacturing decreased slightly on balance, and several districts said manufacturers were stockpiling inventories in anticipation of higher tariffs. Residential real estate activity was unchanged on average, as high mortgage rates continued to restrain demand.
Commercial real estate sales edged upward. The nonfinancial services sector grew slightly overall, with districts highlighting growth in leisure and hospitality and transportation, notably air travel. 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. Nonprofit social service agencies faced high demand amid uncertainty about future funding levels.
Agricultural conditions remained weak overall, with generally lower farm incomes and weather-related struggles in some areas. The spread of avian flu reduced egg supplies and pushed prices higher.
Energy activity was mixed. 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
Employment ticked up on balance, with six districts reporting a slight increase and six reporting no change. Contacts in several service industries, notably healthcare, continued to see job growth.
Construction employment increased slightly, while manufacturing employment was flat. Contacts across multiple sectors noted difficulty finding skilled workers, and reports of layoffs remained rare.
However, contacts in some districts expressed greater uncertainty about their future staffing needs. Wage growth picked up to a moderate pace in most districts, though there were some reports that wage pressures had eased.
PRICES
Prices increased modestly, with growth rates ranging from flat to moderate. Most districts reported modest increases in prices, though there were instances of flat or decreasing prices as well, particularly in the retail and manufacturing sectors.
Input costs also rose, with contacts highlighting higher insurance prices, particularly for health insurance. However, there were several mentions of flat or lower input costs, particularly for fuel.
Contacts expected prices to continue rising, with some noting the potential for tariffs to contribute to price increases.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $207.38 per cwt to $214.72, compared with last week’s range of $205.00 to $214.53 per cwt. FOB dressed steers, and heifers went for $321.91 per cwt to $333.53, compared with $322.23 to $329.95.
The USDA choice cutout Wednesday was up $0.24 per cwt at $331.97 while select was off $3.13 at $314.52. The choice/select spread widened to $14.08 from $14.08 with 146 loads of fabricated product and 25 loads of trimmings and grinds sold into the spot market.
The USDA-listed the weighted average wholesale price for fresh 90% lean beef was $376.30 per cwt, and 50% beef was $116.16.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.18 to $1.30 a bushel over the May corn contract, which settled at $4.72, down $0.03 3/4.
No live cattle were tendered for delivery Wednesday.
The CME Feeder Cattle Index for the seven days ended Tuesday was $288.97 per cwt, up $0.19. This compares with Wednesday’s May contract settlement of $288.35, up $1.42.