On Wednesday, October 18th, Eastern Time, the Federal Reserve released a survey report on the economic situation prepared by 12 local Federal Reserve banks - the Brown Book. It is expected that economic growth will slightly slow down in the short term, while pointing out that labor market tension will continue to ease in September and prices will continue to rise moderately. Companies expect inflation to slow down in the coming quarters.
Compared to the previous report, there has been little change in economic activity, and consumer spending is uneven
In terms of economic activity, the Beige Book stated that since the release of the previous Beige Book in early September, the economic activity in most local Federal Reserve jurisdictions has remained almost unchanged.
The brown book shows that during the six week reporting period from August 28th to October 6th, consumer spending varied due to differences in prices and product offerings, especially in the consumption reported by general retailers and car dealerships.
The tourism industry activity continues to improve, but some Federal Reserve jurisdictions have reported a slight slowdown in consumer travel growth, while a few regions have indicated an increase in business travel.
The survey respondents in the banking industry reported a slight decrease in loan demand. They generally believe that the quality of consumer credit is stable or healthy, and the loan default rate has slightly increased, but it is still at a historical low.
The real estate situation has hardly changed, and the stock level of unsold houses is still low.
Multiple contacts from the Federal Reserve believe that the outlook for the manufacturing industry is improving, but overall activity in the manufacturing industry is mixed.
The survey respondents generally believe that the recent economic outlook is stable or there is a slight slowdown in growth. As for companies that use the holiday shopping season as an important sales force, their expectations are mixed.
Most regions have seen moderate wage increases, and companies are trying to mitigate the increase in labor costs
In terms of the job market, the overall number of employees in most Federal Reserve jurisdictions has slightly increased, and the urgency of corporate recruitment has decreased. Multiple regions have reported an increase in talent recruitment and retention rates as job applicants increase, the range of candidates expands, and employed individuals are less willing to negotiate employment terms.
However, most regions still report ongoing challenges in recruiting and hiring skilled workers. A few regions emphasize that elderly workers still remain in the labor force, either staying in their current positions or returning as part-time workers.
In terms of salary, most regions have seen moderate or moderate wage increases, with multiple regions reporting less resistance from job applicants to the salary conditions proposed by employers. Multiple reports suggest that companies have revised their compensation plans to alleviate the increase in labor costs, including measures such as allowing remote work to replace higher wages, reducing signing bonuses, shifting to a more performance-based compensation model, and burdening employees with greater benefits such as healthcare.
Enterprises expect prices to rise at a slower rate in the coming quarters than in previous quarters
In terms of prices, local Federal Reserve jurisdictions have pointed out that the growth of input costs for manufacturing enterprises has slowed down or stabilized, but the input costs for service industry enterprises continue to increase. The increase in fuel costs, wages, and insurance has led to price increases in various regions.
The rate of increase in product sales prices is lower than the rate of increase in input prices, as consumers become more sensitive to prices and companies find it difficult to pass on cost pressures. Therefore, it is difficult for enterprises to maintain ideal profit margins.
Overall, the surveyed companies expect prices to rise in the coming quarters, but the growth rate will be lower than in the previous quarters. Some regions have reported a decrease in the number of companies expected to experience significant price increases in the future.