Federal Reserve Bank of Atlanta

Summary of Economic Activity

The Sixth District economy grew modestly in recent weeks. Labor markets and wage pressures eased further amid less turnover and a rising pool of applicants. Nonlabor costs continued to moderate overall, but some costs, such as technology and insurance, rose. Low- and moderate-income consumers traded down to less expensive items, taking advantage of extended payment options. Auto sales were mixed. District tourism was strong. Home sales fell to below pre-pandemic levels. Commercial real estate conditions declined. Transportation activity was mixed. Manufacturing slowed somewhat. Overall loan demand weakened. Energy production fell as maintenance and inclement weather cut refining capacity.

Labor Markets

Hiring was described as steady over the reporting period. Most contacts indicated that labor turnover had eased, and the pool of applicants had increased; however, many indicated that finding workers remained challenging. Several employers noted being more strategic in their hiring, focusing on candidate quality and work experience. Some firms partnered with local educational institutions to customize programs to upskill and prepare workers to fill roles. Firms concentrated on efficiencies and keeping costs in check by automating tasks, leveraging generative AI, and outsourcing professional services. Construction firms remained constrained by worker shortages and invested in labor-saving equipment and process improvements. Some manufacturing firms adjusted staffing down due to lower demand, and others planned to downsize both professional and hourly roles.

Most firms indicated that overall wage pressure eased somewhat, and wage growth rates were close to or just slightly higher than pre-pandemic.


While the pace of most nonlabor input cost increases continued to slow, cost levels remained elevated. Technology, labor, and especially insurance cost increases were the most frequently cited inflationary concerns. Consumers pushed back or traded down from higher-priced items, limiting firms' pricing power and eroding margins. The Atlanta Fed's Business Inflation Expectations survey showed year-over-year unit cost growth decreased in January to 2.7 percent, on average, from 2.9 percent in December; firms' year-ahead inflation expectations for unit cost growth decreased in January to 2.2 percent, on average, from 2.4 percent in December.

Community Perspectives

The discontinuation of pandemic-era programs, such as enhanced SNAP and child tax credit programs, emergency rental assistance, and extended Medicaid coverage—compounded by rising prices—continued to weigh heavily on many households. Housing expenses remained an acute burden for both consumers and providers of affordable housing. Consumer-facing business contacts noted that low- and moderate-income consumers shifted spending to less expensive items and sought extended payment options. Social service organizations reported heightened demand for food and housing assistance; most reported sufficient funding to help meet the increased demand for services. Local government and nonprofit representatives reported strong demand for skilled labor, while citing insufficient training as an obstacle for local jobseekers looking for employment in higher-wage occupations.

Consumer Spending and Tourism

In line with previous reports, retailers described consumers as price conscious. Contacts experiencing this trend see it as an ongoing normalization of consumer behaviors. Auto sector contacts reported some softening in demand in the commercial and vehicle rental markets, while new car sales for personal use remain healthy. Overall, contacts are expecting flat to positive growth for 2024.

District travel and tourism remained resilient on balance. South Florida cruise lines continued to report strong demand. Festivals, sporting events, business conferences, and conventions were well attended, particularly in New Orleans, where contacts reported a solid lineup of events for the second quarter. Looking ahead, contacts are optimistic for the remainder of the year.

Construction and Real Estate

As mortgage rates retreated from cyclical highs, home ownership affordability improved throughout the District. However, home sales in most major markets ended the year well below seasonal norms and remained significantly behind pre-pandemic levels. Potential buyers locked-in to historically low mortgage rates remained reluctant to move, and migration into the District moderated through 2023, resulting in diminished housing demand. Existing home inventory levels were also suppressed by the "lock-in effect," resulting in flat to moderate price growth in many markets. Demand for newly constructed homes was boosted by the lack of existing homes, and builders saw improved traffic as mortgage rates declined. Contacts indicated higher lot costs as a significant impediment moving forward.

Commercial real estate (CRE) market conditions slowed. Office markets led the decline amid falling rents, increasing concessions, and weakening occupancies. Most market segments are expected to remain challenging as sizeable amounts of new construction are delivered, especially in the multifamily and industrial segments. Insurance costs continued to rise at atypically elevated rates, especially in coastal markets. Like the nation, Sixth District markets will contend with rising CRE loan maturities in 2024.


Transportation activity was mixed overall. Ports continued to see strong activity, though down from pandemic highs; trucking firms struggled with significantly reduced volumes; and railroads experienced some stabilization in certain freight markets, including chemicals and forest products, following a significant slowdown in 2023. Current demand for distribution space was characterized as below 2019 levels, with significant softening expected to continue through 2024. Air cargo freight volumes strengthened for the first time since 2022. Inland barge companies reported strong and stable demand. The outlook by transportation contacts is generally favorable even amid geopolitical uncertainty.


Manufacturing activity slowed slightly in recent weeks but remained healthy overall. Some firms, particularly producers of consumer goods, reported declines in new orders and increased inventory levels. However, those producing goods for the tech industry or government projects saw strong demand. Manufacturers reported that supply chains were healthy in general, although a minority of firms saw some shipping delays of inputs. The Manufacturing Sector Report of the Atlanta Fed's Business Inflation Expectations Survey showed that for the majority of respondents, demand remained at or below "normal" levels.

Banking and Finance

Lending at Sixth District financial institutions flattened since the previous report, given tighter underwriting standards and weaker demand for loans, including commercial real estate, commercial and industrial, and consumer loans. Multifamily is the only portfolio segment that experienced any notable uptick in growth. As noted in the previous report, the high interest rate environment has contributed to earnings concerns. Demand for large time deposits, those in excess of $100,000, was considerable and continued to outpace loan growth, driving margin compression. Reliance on borrowings experienced a recent uptick after a sustained decline over the past year. Additional earnings pressure has resulted from lower fee income in anticipation of credit deterioration.


Energy contacts reported that short-term headwinds from heavy refinery maintenance and weather-induced outages, which have cut refining capacity, resulted in crude inventory builds, and are expected to put upward pressure on pricing until refineries come back online. Contacts also noted declining domestic crude oil production in the wake of severe winter storms. More broadly though, ongoing optimism was expressed about growing cleaner energy investment stemming from substantial tax credits offered by the Inflation Reduction Act. Utility contacts reported strong electricity demand across segments over the reporting period.

For more information about District economic conditions visit: https://www.atlantafed.org/economy-matters/regional-economics.

Back to Top
Last Update: March 06, 2024