November 29, 2023 | 14:50
Beige Book: Economic Activity Slowed
The latest Beige Book, prepared by the Atlanta Fed, noted that “economic activity slowed” since October’s report. Although tourism and travel stayed “healthy”, sales of discretionary items and durable goods faltered as consumers became more price sensitive.
On inflation… Overall price gains “moderated” across Districts, with inflation expected to continue easing into next year.
On the labor market… Conditions are becoming less tight amid easing labor demand. More headcount reductions were reported and some firms “felt comfortable letting go low performers”. Many Districts also noted easing wage pressures.
On credit conditions… “Consumer credit remained fairly healthy, but some banks noted a slight uptick in consumer delinquencies”.
Bottom Line: Although Q3 economic growth topped 5% a.r., that’s in the rearview mirror now. The Fed’s regional report card, prepared for the December 12-13 meeting, suggests that the economy is slowing. Elevated interest rates and easing labor market conditions are working to soften consumer demand. The anecdotes from the Fed’s Beige Book will likely allow the central bank to comfortably remain on the sidelines for a third straight meeting.