Federal Reserve Bank of Chicago

Summary of Economic Activity

Economic activity in the Seventh District increased slightly overall in late February and March, and contacts generally expected a similar rate of increase over the next year. Employment increased modestly; business and consumer spending rose slightly; nonbusiness contacts saw no change in activity; and manufacturing and construction and real estate activity were flat. Prices and wages rose moderately, while financial conditions were stable. Prospects for 2024 farm income were unchanged, with expectations continuing to be for income to fall below 2023 levels.

Labor Markets

Employment increased modestly over the reporting period and contacts expected a similar rate of increase over the next 12 months. Contacts noted a small rise in hours per worker on balance, with cuts in manufacturing offset by higher workweeks in other sectors. Contacts across sectors indicated labor market conditions continued to cool. Several noted higher numbers of job applications per posting and improved applicant quality. Wages and the cost of benefits both increased moderately. Several contacts noted that wage pressures had eased some.


Prices rose moderately overall in late February and March and contacts expected a similar rate of increase over the next 12 months. Producer prices moved up moderately. Nonlabor input costs continued to rise, with contacts noting higher prices for raw materials and energy. Shipping costs were up on net: While ground freight rates moved down, one contact said ocean freight charges were up some after the collapse of the Francis Scott Key Bridge in Baltimore. Several manufacturers indicated that raising prices had become more difficult in recent months and that their margins had shrunk. Consumer prices were up moderately overall.

Consumer Spending

Consumer spending increased slightly over the reporting period. Nonauto retail spending was up a bit, with contacts noting greater sales of laptops and big screen TVs as well as a rise in window and door installations. One contact cautioned, however, that the increase in sales in March could be related to an early Easter rather than growth in underlying demand. Spending on discretionary items was down, while spending at discount stores and membership clubs was up. Leisure and hospitality activity dipped, most notably at hotels, tourist attractions, and airlines. Vehicle sales rose in recent weeks, with larger growth in new cars and light trucks than in the used vehicle market. Consumers gravitated further toward more affordable models, particularly compact and subcompact crossover and sport utility vehicles.

Business Spending

Business spending increased slightly in late February and March. Capital expenditures ticked up with contacts noting purchases of software. One contact said that his firm had substantially cut costs by switching from an external provider of marketing materials to generating materials using AI with no impact on sales. Demand for truck transportation services decreased slightly, contributing to a decline in ground freight rates. Inventories for consumer goods were somewhat elevated. Auto dealers reported higher-than-desired inventories of new vehicles, but lower-than-desired inventories of used vehicles. Manufacturing stocks were slightly above comfortable levels. There were few reports of input shortages, though some contacts noted shortages of electrical components, and a heavy machinery contact said some inputs were in short supply because of reduced shipping volumes through the Suez Canal.

Construction and Real Estate

Construction and real estate activity was little changed on balance over the reporting period. Residential construction activity was flat. Residential real estate activity increased slightly overall, with growth concentrated in the starter and luxury segments. In Iowa, multiple contacts indicated that the pace of new home sales was notably slower than last year. Home inventories remained low, and prices and rents were up slightly. Realtors continued to hear from prospective buyers that affordability is their top concern. Nonresidential construction activity increased slightly, as some projects were still moving ahead despite high building and financing costs, notably for healthcare facilities and retail renovations. One contact said that quoting for potential new projects was at a healthy level. Commercial real estate activity was unchanged, as were prices and rents. Activity in the office segment was very limited, and contacts noted buyers and sellers were struggling to agree on valuations. In other segments, contacts said asking prices had come down by even more than offer prices, leading to more deals going through. Contacts noted that for the financing of deals to work, buyers were often having to put down large amounts of equity.


Manufacturing demand was flat on balance in late February and March. Both auto and heavy truck sales were unchanged, and heavy truck contacts expected little or no growth over the next 12 months. Machinery sales were down modestly, with contacts highlighting slower demand for agricultural equipment. Demand for steel was flat on balance. Activity in fabricated metals was also steady, with higher demand from defense offset by lower demand from aerospace.

Banking and Finance

Overall, financial conditions were unchanged in late February and March. Bond market values increased slightly, equity markets rose modestly, and volatility edged down. Business loan demand declined modestly. One contact noted that small trucking companies were struggling because of a slowdown in demand and high debt loads following recent fleet expansions. Business loan rates were slightly higher, terms tightened some, and loan quality was unchanged. Consumer loan demand decreased on balance, with one contact noting a slowdown in auto lending. However, there was also a report of higher credit card usage. Consumer rates rose slightly, terms tightened a bit, and quality edged down.


Prospects for 2024 farm income were little changed overall for crop and livestock producers with contacts continuing to expect incomes in 2024 to fall below 2023 levels. Field work in preparation for planting was well ahead of the usual pace given warmer-than-usual temperatures. Precipitation across the District improved water levels, though some areas remained in drought. Corn and soybean prices increased slightly amid expectations that farmers would plant fewer of these crops than earlier anticipated. Wheat prices were generally lower. Egg prices fell, most dairy prices were down, and hog prices were higher. Cattle prices rose despite a decline toward the end of the period after news of an avian flu outbreak in cattle raised concerns that beef demand would weaken.

Community Conditions

Community, nonprofit, and small business contacts saw little change in economic activity over the reporting period. State government officials reported a slight decrease in sales tax revenues compared with a year ago. Small business intermediaries, including Community Development Finance Institutions, noted increased loan demand and said clients continued to mention that challenges in finding workers were holding back growth. Social service organizations, philanthropies, and municipal leaders said that the end of COVID-era federal government financial support would soon result in budget gaps for state and local governments. For low-income consumers, elevated price levels, particularly housing costs, remained a challenge for household budgets. Efforts to increase the supply of affordable housing continued to run up against high costs for materials and labor.

For more information about District economic conditions visit: https://chicagofed.org/cfsec.

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Last Update: April 17, 2024