bee Calculated Risk On 3/05/2025 02:00 PM PM
Fed's Beige Book
Overall Economic Activity Rose Slightly Since Mid-January. Six Districts Reported No Change, Four Reported Modest or Moderate Growth, and Two Noted Slight Contractions. Consumer Spending was Lower on Balance, With Reports of Solid Demand for Essential Goods Mixed With Increased Price Sensitivity For Discretionary Items, Particularly Among Lower-Income Shoppers. Unusual weather conditions in some regions over recent weeks Wakened demand for leisure and hospitality services. Vehicle Sales Were Modestly Lower on Balance. Manufacturing Activity Exhibited Slight to Modest increases across a majority of districts. Contacts in Manufacturing, Ranging from Petrochemical Products to Office Equipment, expressed concerns over the potential impact of looming trade policy changes. Banking activity was slightly higher on balance Among districts that reported on it. Residential real estate markets were mixed, and reports pointed to ongoing inventory constraints. CONSTRUCTION Activity declined modestly for both residential and nonresidential units. Some contacts in the sector also expressed nervousness around the impact of potential tariffs on the price of lumber and other materials. Agricultural conditions deteriorated some Among Reporting Districts. Overall expectations for economic activity over the coming months were slightly optimistic.
Labor Markets
EMPLOYMENT NUDDED SLOUTLY higher on balancewith four districts reporting a slight increase, Seven Reporting No Change, and one reporting a slight decline. Multiple Districts Cited Job Growth in Health Care and Finance, While Employment Declines were reported in Manufacturing and Information Technology. Labor available for many sectors and districts, though there were occasional reports of a tight labor market in targeted sectors or occupations. Contacts in Multiple Districts Said Rising uncertainty over immigration and other matters was influencing current and future Labor demand. WAGES Grew at a modest-to-modernate pace, which was slightly slower than the previous report, with several districts noting that wage pressures were easing.
Prices
Prices increased moderately in most districts, but several districts reported an uptick in the pace of increase relative to the previous reporting period. Input Price Pressures were generally greater than sales price pressures, particularly in Manufacturing and Construction. Many districts noted that higher prices for eggs and other food ingredients were impacing food processors and restaurants. Reports of substantial increases in insurance and freight transportation costs were also widespread. Firms in multiple districts noted difficulty passing input costs on to customers. However, contacts in most districts expected potential tariffs on inputs would lead them to raise prices, with isolated reports of firms raising prices preemptively.
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This report was prepared at the Federal Reserve Bank of Minneapolis based on information collected on or before February 24, 2025.
Emphasis added