USA (Washington Insider Magazine)— The US economy expanded slightly between early April and mid-May, the US Federal Reserve (Fed) stated this Wednesday in its Beige Book, a document prepared by the country’s twelve regional central banks that provides a detailed assessment of the macro picture.
Regional activity
According to Eleconomista, ten of the twelve regions reported “slight or modest” growth in economic activity, while two regions reported stagnation. Retail spending was described as “stable or slightly increasing”,” influenced by lower discretionary spending and increased consumer price sensitivity. As a result, economic agents were “slightly more pessimistic” due to rising uncertainty and greater downside risks.
Sector-Specific Developments
Automobile Sales
Automobile sales remained largely unchanged, with some districts noting that manufacturers offered incentives to boost sales.
Travel and Tourism
Travel and tourism saw significant growth across much of the United States, driven by increased leisure and business travel. However, forecasts for the summer season were described as “mixed.”
Transportation
The transportation sector presented “mixed” signals. Port and railway activity picked up, while freight and road transport activity varied.
Nonprofit Organizations and Industrial Activity
Nonprofit organizations reported “continued strong demand” for their services. Industrial activity was “stable or growing,” although two districts noted declines. Overall, demand for non-financial services increased.
Lending and Real Estate
“Tight credit conditions” and high interest rates limited lending growth during this period. Housing demand grew “slightly,” and single-family home construction increased, but high rates affected sales activity. The commercial real estate sector “softened” amid concerns about supply, restricted credit flow, and borrowing costs.
Energy and Agriculture
Energy activity remained mostly stable. Agriculture exhibited a “mixed” performance, with drought conditions easing in some areas, though agricultural incomes remained a concern.
Employment
Employment rose “slightly” overall. Eight districts reported “negligible to modest” increases, while four saw no change. Labor availability improved, though shortages persisted in some areas. Staff turnover decreased, and employer bargaining power strengthened in some regions. Wage growth was “eminently moderate,” with some districts reporting “more modest” increases. Looking forward, a few districts expected “modest gains” in employment to continue, while others anticipated a decline in hiring expectations due to lower business demand amid uncertainty.
Prices
Prices increased at a “moderate” pace, with many retailers offering discounts to attract new customers. Greater consumer price sensitivity led to smaller profit margins due to higher input costs, particularly insurance. Some districts reported decreases in the prices of certain construction materials and industrial raw materials.