Beige Book Survey Finds Weaker Economic Conditions
The survey of FED Districts through April 7 found weakened economic conditions since the last report in Feb. Nine Districts noted a further slowing in the pace of activity and 3 described activity as mixed or steady.
In general, banks reported mixed activity with consumer loan demand weakening and a deterioration in credit quality.
Consumer spending softened across most of the country with some Districts reporting y-o-y declines. Auto sales were described as flat or declining. Retail inventories were generally on the rise.
Bright spots: Tourism and health care services. A few Districts also reported continued expansion in some business services.
Manufacturing activity was mixed, but manufacturers reported an overall subdued outlook due to uncertain economic conditions. Demand for aircraft and defense goods remained strong but vehicle production was declining in the Atlanta region. The demand for goods related to construction continued to decline and excess capacity led to production declines in some high-tech industries in the Dallas District.
Transportation activity was described as sluggish and weakening with some port cities noting fewer imports but more robust export activity.
Residential construction activity was still weak in all Districts. Home sales were generally reported to be declining although there were pockets of improvement in Richmond, Atlanta and Cleveland. Housing prices were under downward pressure in most areas — even New York City and the Pacific Northwest. Mortgage lending activity was at low levels but stabilizing in some Districts.
Commercial real estate activity was generally steady or softening with weaker rental conditions in 8 regions. Only St. Louis reported strong commercial construction activity. Some weakness was reported in prices and sales of commercial properties. There was a widespread tightening of standards for both residential and commercial real estate loans.
Input prices were generally rising faster than output prices and putting pressure on margins. The ability of companies to raise prices was mixed with manufacturers having somewhat better pricing power than services.
Employment levels were little changed with some weakening in the job market reported in 6 Districts. Firms in 3 Districts reported layoffs, reductions in work hours, or freezes in response to current or expected slowdowns in activity. There were still isolated reports of shortages of skilled workers in some areas, which caused some increased wage demands.