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Fourth District Beige Book

Summary of Economic Activity

Economic activity in the Fourth District accelerated somewhat in recent weeks after having decelerated over the summer and early fall. While most businesses indicated that demand for their goods and services remained solid, some suggested that persistent supply-side disruptions (and associated higher costs) led some customers to put off spending until availability of products improved or costs came down. For example, one auto dealer said that only customers who need to buy a car are doing so, while others who want one may be sitting on the sidelines. A key factor limiting capacity was the ongoing labor shortage. A few contacts reported that labor availability improved a little in recent weeks, but they were clearly in the minority. Moreover, even those who had seen an increase in applicants noted that the increase was not sufficient to meet their staffing needs. Wages and other input costs continued to rise in recent weeks, and a larger share of firms reported output price increases. Looking forward, contacts were generally more optimistic about demand in coming months than they were in the prior report, even as they expected shortages and higher costs to persist.

Employment and Wages

Staffing levels continued to trend modestly higher in the District. Demand for labor was strong across industries, but a dearth of available workers constrained hiring. Many firms continued to say that they needed to hire additional workers to keep up with current demand but were unable to do so, a situation leading to flat and often falling staffing levels. Some firms, including retailers, restaurants, and hotels, curbed hours of service because of a lack of workers. On balance, contacts said that labor availability has changed little since our last report, and they did not expect it to change meaningfully in coming months. Several firms indicated that they were reluctant to mandate vaccines because doing so would likely disadvantage them in an already competitive labor market.

Reports of wage increases were more frequent in recent weeks amid those persistent hiring challenges. Nearly 70 percent of our contacts reported that wages had risen over the prior two months, and the increases were broad based across industries. While wage increases were most notable for entry-level positions, contacts suggested that pay was increasing across the wage scale. Moreover, firms were reportedly enhancing other benefits such as hiring and retention bonuses and flexible work arrangements to attract and retain workers.


Nonlabor input costs continued to increase. Eighty percent of contacts reported higher nonlabor input costs over the prior two months, with the increases broad based across industries and inputs. As one logistics contact stated, “Gas, electric, food, raw materials, products, everything is going [up].” With broad-based supply disruption expected to persist into 2022, most contacts expected costs to continue rising in coming months. That said, a few contacts suggested that the availability of semiconductors, a key constraint in the production of many goods (including autos), had increased somewhat over the prior two months.

More firms reported higher selling prices since the last report. Approximately 65 percent of contacts said they increased prices over the prior two months, a share that has changed little over the past four reports. In most instances, firms suggested that they raised selling prices out of necessity to keep up with increased input costs. One restaurant owner said that she was trying to “control every other aspect [she] can before raising prices.” Several contacts who did not increase prices could not do so because they were bound by contracts. Some of these firms plan to include escalation clauses in the future.

Consumer Spending

Reports suggested that consumer spending increased modestly during the reporting period. General merchandisers and apparel retailers said that demand for goods remained strong, and they noted solid early holiday season sales. Hoteliers and restaurateurs reported continued improvement in activity, and one hospitality contact said that weddings and conferences that had been rescheduled from last year were taking place. Auto dealers reported a dip in sales despite generally strong demand as tight inventories and higher prices deterred buyers. Contacts expected a favorable holiday shopping season and were optimistic that nonauto consumer spending would continue to increase in the coming months. However, auto dealers suggested that sales will remain weak until inventory levels recover, with some expecting supply bottlenecks to begin to ease as early as next quarter.


Demand for manufactured goods remained solid, but the ability to meet that demand was hampered by continued supply chain disruptions. That said, some contacts reported that they saw increased demand for their products because their competitors were out of stock or had changed their product offerings. Several manufacturers noted sustained weakness in demand from auto-related customers as key inputs to that industry (including semiconductors) remained in short supply. Looking ahead, contacts were optimistic that activity would remain strong, and some noted that the passing of the infrastructure bill and an increase in auto production could boost demand.

Real Estate and Construction

Homebuilders and residential realtors reported that housing demand remained strong despite persistent supply chain disruptions that have further increased lead times for new homes. One homebuilder attributed the heightened demand to the desire of individuals to lock in low interest rates. Going forward, contacts anticipated demand will remain elevated, though homebuilders expected supply constrains will continue to hinder construction activity.

Demand for nonresidential construction and real estate continued to rebound. Industrial and retail leasing activity remained strong, and an increasing number of individuals returning to in-person work further improved demand for office space. Nonresidential construction contacts also indicated that demand remained strong, though persistent supply chain disruptions led to further increases in lead times. Overall, contacts were optimistic that demand would remain strong. However, a few construction contacts raised concern that the recently signed infrastructure bill could put further pressure on supply chains.

Financial Services

Loan demand increased moderately. Contacts reported some growth in business lending, especially for commercial real estate loans, and many bankers reported a stronger loan pipeline. Contacts noted that demand for auto loans and mortgages was stable to slightly down as higher selling prices and limited inventories in both markets dampened activity. Lenders said that delinquency rates for consumer and commercial loans were still low and that core deposits increased. Looking ahead, bankers were optimistic that business lending would continue to improve as pipelines strengthen.

Professional and Business Services

Contacts in professional and business services reported that demand remained robust. Firms attributed the strong demand to the overall health of the economy that has increased companies’ desire to move forward with projects and acquisitions. One law firm noted that their clients’ economic outlook remained optimistic and that challenges brought on by supply chain disruptions and labor shortages have been outweighed by favorable business opportunities. Going forward, demand is expected to remain strong as firms continue to ramp up business activity and actions from the federal government related to vaccine mandates and the infrastructure bill further increase the need for compliance and engineering solutions.


Demand for freight and logistics services remained strong. A regional airport relayed that cargo volumes were up more than 20 percent year over year. Contacts reported that the availability of drivers remained limited. More often, equipment shortages also made it difficult to expand capacity. Because it was difficult to add capacity, contacts expected that demand in the coming months would continue to be stronger than the sector’s ability to meet it.