Economic activity expands, but consumers feel the squeeze

Economic activity increased at a slight to moderate pace in 11 of 12 Federal Reserve districts during late May and June — matching the previous period’s pace.

Latest Federal Reserve Beige Book data shows consumer spending edging up, but higher fuel prices are dampening discretionary sales and pushing many households to seek cheaper goods.

Construction and real estate activity increased slightly overall, with several districts specifically highlighting growth in data center building.

Financial conditions held steady on balance, with commercial and consumer loan volumes both up modestly. Commercial loan quality was stable but consumer quality ticked down.

Beige Book respondents generally expect continued economic expansion, though several districts flagged elevated uncertainty around future fuel costs.

Regional real estate, construction trends vary

Boston reported slight expansion, with consumer spending buoyed by the World Cup but discretionary spending softening among lower-income households.

New York saw modest growth, with service sector activity finally picking up after a long weakness. Philadelphia rose slightly after a prior decrease — while Cleveland posted modest growth with robust selling price increases.

Richmond expanded moderately, with consumer spending holding up despite shifts in behavior — even among higher-income consumers.

Atlanta grew modestly, though residential and commercial real estate were little changed.

Chicago activity increased modestly, with construction and real estate up slightly.

Dallas rose moderately, with the real estate sector mixed, and San Francisco reported stable but muted activity amid steady conditions in real estate and financial services.

Employment gains widen, skilled labor remains scarce

Employment rose on balance, with five districts reporting modest, moderate or solid gains — up sharply from only one district in the prior period.

The remaining seven districts saw little to no change. Hiring occurred across manufacturing, construction and retail.

Skilled workers — especially technicians and tradespeople — remained difficult to find. A couple of districts reported small employment declines. Wage growth was modest to moderate in most districts, with two reporting only slight increases.

Some wage gains reflected heightened competition for skilled labor. A few districts noted that firms had increased use of artificial intelligence, both in hiring and screening processes and to boost worker productivity.

Prices still going up in some regions

Prices increased moderately overall, with nine districts reporting moderate growth, two robust growth and one slight growth. Compared with the prior period, price growth was the same or slower in all districts.

Non-labor input costs rose across services, construction and manufacturing — driven by higher energy, transportation and raw material expenses. Some contacts tied these increases to the Middle East conflict, while others pointed to tariffs.

Consumer prices continued to climb and a few districts noted greater price sensitivity among customers. In a couple of districts, selling prices grew less than input costs, crimping margins.

Expectations for future price growth varied. Some contacts see inflation persisting at its current pace, while others anticipate a slowdown — partly due to falling fuel prices.

This article was written by Jonathan Delozier and generated with the assistance of HousingWire Automation. It was reviewed by a HousingWire editor before publication.