National Summary

This report was prepared at the Federal Reserve Bank of Philadelphia based on information collected on or before May 23, 2022. This document summarizes comments received from contacts outside the Federal Reserve System and is not a commentary on the views of Federal Reserve officials.

Overall Economic Activity
All twelve Federal Reserve Districts have reported continued economic growth since the prior Beige Book period, with a majority indicating slight or modest growth; four Districts indicated moderate growth. Four Districts explicitly noted that the pace of growth had slowed since the prior period. Contacts in most Districts reported ongoing growth in manufacturing. Retail contacts noted some softening as consumers faced higher prices, and residential real estate contacts observed weakness as buyers faced high prices and rising interest rates. Contacts tended to cite labor market difficulties as their greatest challenge, followed by supply chain disruptions. Rising interest rates, general inflation, the Russian invasion of Ukraine, and disruptions from COVID-19 cases (especially in the Northeast) round out the key concerns impacting household and business plans. Eight Districts reported that expectations of future growth among their contacts had diminished; contacts in three Districts specifically expressed concerns about a recession.

Labor Markets
Most Districts reported that employment rose modestly or moderately in a labor market that all Districts described as tight. One District explicitly reported that the pace of job growth had slowed, but some firms in most of the coastal Districts noted hiring freezes or other signs that market tightness had begun to ease. However, worker shortages continued to force many firms to operate below capacity. In response, firms continued to deploy automation, offer greater job flexibility, and raise wages. In a majority of Districts, firms reported strong wage growth, whereas most others reported moderate growth. However, in a few Districts, firms noted that wage rate increases were leveling off or edging down. Moreover, while firms throughout the country generally anticipate wages to rise further over the next year, one District indicated that its firms' expected rate of wage growth has fallen for two consecutive quarters.

Most Districts noted that their contacts had reported strong or robust price increases – especially for input prices. Two Districts noted that this rapid inflation was a continuation of trend; however, three Districts observed that price increases for their own goods or services had moderated somewhat – across the board (among Philadelphia firms) or for some segments (used cars in Boston and manufacturing in Richmond). About half of the Districts observed that many contacts maintained pricing power – passing costs on to clients and consumers, often with fuel surcharges. However, more than half of the Districts cited some customer pushback, such as smaller volume purchases or substitution of less expensive brands. Surveys in two Districts pegged year-ahead increases of their selling prices as ranging from 4 to 5 percent; moreover, one District noted that its firms' price expectations have edged down for two consecutive quarters.

Highlights by Federal Reserve District

Economic activity in the First District increased slightly amid robust wage and price growth. Labor scarcity remained a widespread problem as headcounts increased only slightly. Restaurant profits fell on steep input price increases. The outlook for summer tourism was bright, but many contacts' optimism was tainted by growing fears of recession.

New York
Growth slowed to a modest pace, with much of the slowing attributed to supply disruptions, worker shortages, and a COVID resurgence. Businesses added staff amidst high turnover. Tourism strengthened, but consumer spending and manufacturing activity weakened. Businesses continued to report widespread increases in prices and wages. Contacts were somewhat less optimistic about the near-term outlook.

Business activity grew slightly – at a slower pace than in the prior Beige Book period, and some sectors remained below pre-pandemic levels. Rising prices and recession fears have turned consumers and firms more cautious. The labor market remained tight with modest growth. Wage and price growth continued to expand at a moderate and strong pace, respectively, although the pace of both eased somewhat lower.

Business activity decelerated and was slightly positive as firms grappled with ongoing supply chain challenges, tight labor market conditions, and escalating costs. Employment rose moderately. Contacts reported broad increases in wages, costs, and prices. Overall, contacts were less certain about the economic outlook and expected upward pressure on prices to persist.

The regional economy grew modestly over the last several weeks. Consumer spending remained strong while manufacturers and service providers reported modest to moderate growth. Import activity slowed slightly, as did trucking demand. New vehicle and home sales were limited by low inventory levels. Employment increased modestly and wages continued to rise moderately. Overall, price growth remained robust.

Economic activity expanded at a modest pace. Labor markets remained tight, and wages continued to rise. Nonlabor costs rose. Retail sales moderated somewhat. Tourism activity remained strong. Housing demand softened slightly. Commercial real estate conditions remained mixed. Manufacturing activity was strong. Banking conditions were mixed.

Economic activity increased modestly. Employment increased strongly, manufacturing was up moderately, consumer spending moved up modestly, business spending was slightly higher, and construction and real estate activity declined slightly. Wages and prices rose rapidly, while financial conditions deteriorated some. Agriculture income expectations for 2022 were little changed.

St. Louis
Economic conditions have improved at a modest pace since our previous report, although the outlook has weakened. Prices for raw materials and fuel increased robustly. Consumer spending showed increased signs of price sensitivity and a shift from goods to services. Manufacturing firms reported that a backlog of orders should sustain production even as orders slow due to higher prices.

The region's economy grew moderately since mid-April. Demand across sectors remained strong but higher input and labor costs put downward pressure on profit margins. Construction and real estate contacts reported some slowing due to interest rate increases. Demand for credit among minority- and women-owned business enterprises was down amid uncertainty about the economy.

Kansas City
The Tenth District economy grew at a moderate pace, but expectations for future growth softened somewhat due to a variety of factors. Contacts noted a number of shifts in consumer behavior as prices continued to rise at a robust pace. Labor demand remained elevated, and the number of hours worked increased in recent weeks. Wage growth aimed at retaining workers was much faster than observed in recent years.

Economic growth in the district slowed to a moderate pace. Growth remained largely broad-based, except for home sales and retail activity, which dipped. Prices rose at a rapid clip, though several firms noted diminished ability to fully pass on cost increases. Employment and wage gains generally remained solid. Outlooks weakened, and uncertainty increased because of rising headwinds.

San Francisco
Economic activity strengthened moderately over the reporting period. Conditions in the labor market remained tight. Wages and price levels increased significantly. Retail sales continued to increase while demand for services rose considerably. Conditions in the agriculture sector deteriorated somewhat. The residential real estate market remained robust overall, and lending activity was little changed.

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Last Update: June 01, 2022