Fed Beige Book: Outlook Just Got a Bit Worse

The US Federal Reserve (Fed) reported that economic activity continued to expand from early April to mid-May, but the overall outlook has become slightly more pessimistic. The Fed has published the May issue of its "Beige Book" report, which includes assessments of the current state of the American economy. The report, prepared with analyses from 12 branches of the bank, stated that national economic activity continued to expand from early April to mid-May, but conditions varied by sector and region. The report, which stated that retail spending showed a slight increase due to decreased discretionary spending and increased price sensitivity among consumers, noted that automobile sales were almost flat, while travel and tourism strengthened in most of the country due to increased vacation and business travel. The report stated that tight credit standards and high interest rates continue to restrict credit growth. The report, which stated that housing demand increased moderately, noted that conditions in the commercial real estate sector softened due to supply concerns, tight credit conditions and increased borrowing costs. Price increases are expected to continue at a moderate pace The report stated, "The general outlook has become slightly more pessimistic amid reports of increasing uncertainty and downside risks." The report stated that prices increased at a moderate pace, and noted that consumers in most regions opposed additional price increases, which led to lower profit margins as average input prices increased. The report stated, "Price increases are expected to continue at a moderate pace in the near term." The report stated that employment also showed a slight increase in general, and that wage increases mostly remained at a moderate level, and in some regions it was reported that they were at or normalized towards historical pre-pandemic averages.