December 01, 2022

Beige Book reflects ‘unevenness’ in the economy

EconomyThe Federal Reserve released its latest Beige Book yesterday, showing that national economic activity was about flat or up slightly since the previous report, while also being down from the modest average pace of growth in the prior Beige Book period.

The report also revealed that interest rates and inflation continued to weigh on activity, and many contacts expressed greater uncertainty or increased pessimism concerning the outlook.

Auto sales declined slightly on average, but sales increased significantly in a few districts in response to higher inventories. Higher interest rates further dented home sales, which declined at a moderate pace overall but fell steeply in some districts.

The Fed also noted that hiring and retention difficulties eased further, although labor markets were still described as tight. 

“The latest Beige Book reflects unevenness in the economy. Businesses catering to consumers at either end of the income spectrum are flourishing,” said NAFCU Vice President of Research and Chief Economist Curt Long. “High-income households still have plenty of excess savings on hand, while lower-income households are increasingly substituting into cheaper alternatives.

“The overall economy continues to slow modestly, which should accommodate a slower pace of policy tightening from the FOMC,” concluded Long. “NAFCU continues to anticipate a 50-basis point hike later this month.” 

The Beige Book report – a Fed publication on current economic conditions across the 12 districts – was based on information collected on or before Nov. 23.