Beige Book: Most Districts See Modest Increases in Activity

Most of the District commentary in today’s Federal Reserve Beige Book read the same. Ten of the twelve Federal Reserve Districts reported modest increases in economic activity, with Philadelphia reporting a slight decline and San Francisco posting unchanged conditions. All Districts however, reported flat, stable, low hire/low fire labor markets. Manufacturing activity was generally reported stronger, but consumer spending was mixed, with K-shaped consumption evidenced across all Districts. The high-income consumers continue to spend freely, with “unapologetic luxury” spending noted in the Atlanta District. At the same time, moderate income consumers are reducing trip frequency and generally “squeezing more life out of every dollar before deciding to spend it” as one Kansas City District respondent put it, while the lower income tier is struggling. Ports remain under some pressure from tariffs and fuel prices, although the comments from the New York and Atlanta Districts in that regard were generally more constructive than those from the Richmond District. Finally, leisure, hospitality and tourism activity was mixed across the Districts, with the higher-cost regions like Boston, New York and San Francisco reflecting some softness along with a degree of concern over the so far underwhelming World Cup bookings. Other Districts reported firm hospitality activity, but a Minnesota respondent reported being less than optimistic because of higher fuel prices and “cold shoulder Canadians are giving us”.