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Fourth District Beige Book

The Beige Book—officially known as the Summary of Commentary on Current Economic Conditions by Federal Reserve District—is produced eight times each year prior to Federal Open Market Committee (FOMC) meetings. The information in the Beige Book is gathered primarily through interviews with business people in each District, as well as from Federal Reserve Bank and Branch directors. The publication’s original purpose was to supplement official statistics with more current anecdotal accounts of the economic environment in order to assist policymakers during FOMC deliberations.

Summary of Economic Activity

Economic activity in the District was steady on balance. Retailers reported modestly improving sales over the period. Real estate agents also saw increased home sales, including a pickup in the first-time-buyers segment. Bankers reported firm consumer lending as lower interest rates drove mortgage and auto loans, but they reported softening commercial loans. Manufacturers saw weaker demand because uncertainty led their customers to delay capital expenditures. In addition, factory inventories were elevated as sales fell more than anticipated. Freight volumes decreased. Overall District employment remained relatively steady, with little change in most sectors. Wages rose moderately across industry sectors and occupational categories. Prices were little changed in general in the District. However, many contacts expected input costs to rise in the near future, in part because of anticipated new tariffs.

Employment and Wages

Total employment was steady in the District, although reports on hiring varied by industry. Professional and business services firms continued to hire to keep up with strong demand. A few construction contractors added professional or field staff, but the majority did not. One contractor commented, "experienced staff can handle the expected volume." Most freight haulers did not expand their payrolls although turnover remained high. Retailers generally held headcounts steady outside of typical seasonal variations. Meanwhile, factories tried to align their labor needs with slower sales. Generally, manufacturers did not lay off workers, but several implemented other labor-reducing measures such as fewer shifts, reduced overtime, fewer temporary employees, and shrinkage by attrition.

Overall wage growth increased slightly to a moderate pace in recent weeks, with modest to moderate growth in most sectors. Retailers, bankers, and staffing agencies reported strong upward pressure on entry-level wages. One staffing executive commented that many clients were raising entry-level wages, and that it is "very strange to see a client offering the [state] minimum wage." Stiff competition for skilled workers led to higher wages in manufacturing, construction, and professional and business services. A manufacturer said that wages were still rising because "despite demand shortfalls, the employment market remains tight." A nonresidential contractor paid midyear bonuses to his workers, a move atypical for the firm. In contrast, freight haulers saw slower wage growth because weaker demand reduced firms' ability to raise wages.


Prices were little changed on net, though there were small changes in a few sectors. Several manufacturers cut their selling prices because of downward pressure from weakening global demand. First, weakening demand contributed to falling commodities prices to which many manufacturers' contracts were indexed. Second, it led to stiff competition for contracts among global manufacturers. Freight haulers indicated that excess shipping capacity eroded their pricing power. Most retailers held prices steady. Professional and business services firms reported no pricing power because of slower demand growth and strong competition in the sector. A few nonresidential contractors were able to raise prices (and margins) because of persistently strong demand, but residential contractors felt buyers' concerns about affordability meant they were unable to raise prices. Contacts across sectors expected input costs to rise in the future, largely because they anticipated more tariffs.

Consumer Spending

Reports indicated that retail spending increased modestly in recent weeks. Food retailers said that a typical increase in demand for seasonal products and the start of the back-to-school selling season boosted sales. By contrast, apparel retailers indicated activity was relatively flat in recent weeks, although some were optimistic that sales would increase in the near future. Auto dealers reported solid sales in July, with one noting that "lease returns and incentives have bolstered sales."


Manufacturing activity declined modestly as demand continued to soften across end markets. Several contacts reported that both they and their customers had delayed capital spending as trade tensions and related uncertainty clouded their outlooks. Additionally, respondents noted that weakening demand abroad pushed down prices and intensified competition with foreign manufacturers who were looking for new markets in which to sell their products. Capacity utilization declined, but some manufacturers indicated that this was a return to normal following more than a year of hectic activity. Several contacts reported that inventory levels were elevated because demand fell more sharply than anticipated. Looking forward, reports were mixed: some manufacturers believed that orders would improve in the fourth quarter and beyond, while others expected demand to weaken further.

Real Estate and Construction

Overall, construction and real estate activity was steady. On the nonresidential side, builders continued to report stable and strong demand. New projects came from multiple sectors. Backlogs remained strong. One nonresidential contractor described current conditions as "smooth sailing." Nonresidential builders were confident that demand would remain stable and strong through 2019 and into 2020.

On the residential side, homebuilders noted slightly weaker demand, but real estate agents reported stronger sales volume. Some homebuilders indicated that the slowdown may have been because of homebuyers' less optimistic views of the broader economy. By contrast, realtors said that sales volume increased because of a typical seasonal pickup and lower mortgage interest rates. They also reported that homeownership rates were rising as low mortgage interest rates, stronger household formation, and rising rents spurred demand among first-time buyers.

Financial Services

Bankers reported that loan demand declined slightly. In general, demand from commercial clients softened. Consumer lending held firm, as lower interest rates bolstered demand for mortgages and auto loans. Bankers would like to decrease deposit rates to offset declining lending rates, but many reported that competition for deposits remained too intense to reduce these rates. Overall, core deposits increased on balance.

Professional and Business Services

Activity in professional and business services remained solid, but growth softened since the previous report. Consulting firms reported strong activity and generally indicated that their smaller, local clients had a solid pipeline of projects. By contrast, technology firms suggested that activity was flat or down slightly. One technology contact reported softening demand from clients in Asia, and another noted an overall reduction in the volume of large-scale deals.


Freight volumes softened further since the previous report. One freight executive summarized the sector by saying, "freight volumes are down in most channels. It is not clear how much of this is related to the surge of last year wearing off and how much is associated with current demand." Another contact suggested that heightened trade tensions with China have dampened domestic freight demand. Several freight haulers said that shipments will increase ahead of the upcoming holiday season, although some expected fourth-quarter levels to be lower than in the prior year.