Beige Book Report: The Fed’s “Mixed Take” on the Economy

By SBE Council at 13 July, 2023, 7:49 am

by Raymond J. Keating –

The latest Beige Book report from the Federal Reserve served up another mixed take on the U.S. economy. When the economy is generally underperforming and uncertainty swirls, it’s typical to get mixed and/or conflicting reports on assorted industries and regions.

In terms of the economic growth, the Beige Book offered a very mixed assessment. It was noted:

“Overall economic activity increased slightly since late May. Five Districts reported slight or modest growth, five noted no change, and two reported slight and modest declines.”

Along these lines, consumer spending was mixed, while manufacturing “edged up” in half the Fed Districts and declined in the other half. Tourism and travel activity were “robust,” though “some retailers noted shifts away from discretionary spending.”

Banking was “mostly subdued” with lending activity continuing to “soften.” But even with higher mortgage rates, “demand for residential real estate remained steady.”

Job growth was “moderate,” while labor demand remained “healthy.”

As for prices, the sentiment among those interviewed basically aligned with what we’re seeing in terms of inflation slowing. It was reported:

“Prices increased at a modest pace overall, and several Districts noted some slowing in the pace of increase.”

As for what might lie ahead:

“Overall economic expectations for the coming months generally continued to call for slow growth.”

It’s worth keeping in mind that even if the economy manages to slip by a recession, despite the anti-growth measures imposed by policymakers in the Fed, in the White House and by some members on Capitol Hill, slow growth is nothing to celebrate.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest books on the economy are The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist and The Weekly Economist II: 52 More Quick Reads to Help You Think Like an Economist.