Federal Reserve Bank of Atlanta

Summary of Economic Activity

The economy of the Sixth District grew slowly since the previous report. Labor market tightness eased, and wage growth slowed somewhat. Cost growth continued to moderate, but most nonlabor costs remained elevated. Firms' pricing power was mixed. Widespread concerns about household finances were noted by nonprofits serving low- and middle-income communities. Consumer spending was healthy overall. Tourism remained strong, but softened somewhat. Home sales slowed amid declining home ownership affordability, and existing home inventories increased. Commercial real estate conditions were mixed. Transportation activity varied. Banking conditions were stable, and loan growth was flat, on balance. Energy activity was robust. Agriculture conditions weakened.

Labor Markets

On balance, the pace of hiring grew slightly over the reporting period. Several staffing firms reported that job orders were down. Many contacts noted the supply of available talent continued to improve, and turnover rates declined; some firms described turnover as below pre-pandemic rates. However, pockets of shortages remained across the region, varying widely by position, location, and industry. Several Florida firms said that declining housing affordability hindered the ability to attract talent, and one non-profit noted that more employers were pondering building workforce housing. Some transportation, warehousing, and industrial development contacts said they were considering reducing headcount later this year to align with weaker demand. Others said that they had backfilled most of their open positions so hiring would be slower this year.

Most contacts indicated wage growth continued to moderate and was in the range of 3.5 percent to 4 percent.


Though the pace of wage growth continued to stabilize, elevated labor costs and rising insurance premiums contributed to higher operating expenses. However, food and transportation costs decreased, on balance. Construction costs were highly volatile, with some contacts noting a wide range of bids on a given project. Firms also noted adjusting inventory levels down due to the high-interest rate environment. Some firms reported holding prices steady in response to increasingly price-sensitive consumers, and some firms sought efficiencies to preserve margins, while others maintained the ability to pass through rising costs. The Atlanta Fed's Business Inflation Expectations survey showed year-over-year unit cost growth decreased in April to 2.6 percent, on average, from 2.8 percent in March; firms' year-ahead inflation expectations for unit cost growth ticked down to 2.3 percent, on average, in April, from 2.4 percent in March.

Community Perspectives

Career counselors noted increased competition for available employment opportunities as cost-of-living considerations encouraged more people to re-enter the labor force. Several workforce service providers said that employers adopted more selective hiring processes and extended trial on-boarding periods for prospective employees. Though many workers expressed optimism in their ability to secure employment, contacts shared concerns about the quality of available jobs in terms of flexible hours, paid time off, and compensation sufficient to cover basic expenses. Concerns about household finances remained widespread among nonprofits serving low- and middle-income households. Rising insurance costs were cited as both an immediate financial burden for many individuals and a longer-term threat to economic resiliency as property owners reduced or eliminated coverage due to high costs.

Consumer Spending and Tourism

Retailers reported consumer demand was generally healthy, but most expect year-over-year sales growth to be flat. Shoppers were price sensitive and continued to be cautious with discretionary spending. Auto dealerships noted that inventory levels met demand, and manufacturers offered incentives to boost sales.

Tourism and hospitality contacts reported healthy demand for leisure travel, but booking windows were shorter and hotel rates moderated. Contacts noted strong youth sports-related travel, but families opted for short-term rentals with kitchens to forego dining out. Group, international, and business travel continued to improve but were not back to pre-pandemic levels. Hospitality contacts remained optimistic about activity for the summer season.

Construction and Real Estate

District home sales lost momentum in April as higher interest rates and rising home prices led to declining home ownership affordability. Though dampened by the "mortgage rate lock-in effect," existing home inventory levels rose overall. Homebuilders maintained solid market share, although the use of rate buydowns and other incentives were more elevated than expected. Builders indicated less buyer urgency with rising interest rates and increased potential competition from higher existing home inventory levels. Home price appreciation in most District markets was in the single digits, consistent with longer term trends.

Commercial real estate (CRE) conditions remained mixed. Activity in office (especially in highly urban areas) and multifamily sectors continued to slow. Oversupply in the multifamily and industrial segments weighed on market conditions amid delivery of new construction. Vacancy rates grew. Rising insurance costs impeded activity, particularly in coastal markets. Lenders continue to report tight underwriting standards, making access to loans more challenging. Rising CRE loan maturities in 2024 and beyond remained a source of concern.


Demand for transportation services varied across industries. Trucking firms characterized volumes as in-line with or slightly below normal seasonal demand. Warehousing contacts indicated demand was modest overall. Railroads saw gains in automotive, chemicals, forest products and minerals freight volumes, as well as growing momentum in intermodal shipments. Inland barge carriers reported strong activity. District ports along the eastern seaboard noted that catastrophic weather events and the potential for an east coast labor strike in the Fall are the greatest risks to their outlook.

Banking and Finance

Conditions at District financial institutions were stable. Overall loan growth remained relatively flat; however, consumer, industrial, and auto lending continued to contract. Credit conditions continued to normalize to pre-COVID levels with a minor uptick in the allowance for loan and lease losses as a percentage of total loans. Deposit balance growth was flat as compared with the previous report, with some institutions reporting increased reliance on borrowings. Financial institutions reported holding lower balances in cash accounts.


Activity across most energy sectors remained robust. While liquefied natural gas exports and plant expansions were active, new development was stalled by recent federal permitting limitations, which contacts reported had already slowed some activity. Petrochemical manufacturers reported continued progress in carbon capture and storage projects. Utility companies across the southeast report growing electricity demand in commercial and industrial segments, largely attributed to new and expanded data centers, as well as clean tech manufacturing like electric vehicle battery plants, a trend expected to continue across the southeast.


Agricultural conditions weakened slightly. Row crop farmers struggled amid low demand and excess supply, and many do not expect to turn a profit this year. Demand for timber declined, leading some farmers to pause production. Demand for beef was strong, but supply of cattle remained limited; demand for dairy held steady. Poultry producers saw some improvement in revenues from domestic sales, attributed to reduced supply resulting from avian influenza, but foreign restrictions continued to limit exports. Citrus growers reported solid demand and crop yields slightly above expectations.

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

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Last Update: May 29, 2024