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Fourth District Beige Book

The Beige Book contains a summary of reports of economic and community conditions collected from business and civic contacts across the United States. It is published eight times a year as a collaboration between the 12 regional Reserve Banks and the Board of Governors of the Federal Reserve. Each Reserve Bank prepares a report for its respective region. The Federal Reserve Bank of Cleveland gathers information for its contribution primarily using a survey of business and community leaders in the Fourth District. The Cleveland Fed’s most recent report can be found below.

Summary of Economic Activity

On balance, the Fourth District economy expanded slightly in recent weeks, somewhat more slowly than it had during the prior reporting period. Moreover, contacts expected slower growth to continue in the months ahead. Contacts often attributed both the slowdown in growth and lowered expectations to diminished hopes for interest rate cuts in the near future. Consumer spending declined modestly, which some manufacturers said dampened demand for their goods. By contrast, nonresidential construction activity picked up, with increased demand for public sector projects. Employment levels increased slightly in recent weeks, with many firms focused on hiring for key positions. On balance, wage and nonlabor input costs increased moderately, and selling prices increased slightly.

Labor Markets

Overall, employment increased slightly in recent weeks. Some contacts reported hiring more entry-level and management workers to staff long-term projects, meet higher demand, or facilitate business expansions. One manufacturer said they were hiring now in anticipation of increased demand in the second half of the year. By contrast, some contacts indicated that they had slowed or “paused” hiring to control costs amid decreased demand and declining margins. Most contacts expected only modest hiring for their organizations in the near term.

Wage pressures continued to be moderate in recent weeks. Many contacts across industries continued to report that new-hire wages had leveled off and annual wage adjustments had again become the norm. One auto dealer said that wage pressures had eased to the point that they were offering wage adjustments only “when necessary.” Nevertheless, many financial services and construction contacts noted strategically raising wages to attract and retain staff with specialized skills.


On balance, nonlabor input costs continued to increase moderately in recent weeks. However, over half of contacts reported no change in input costs. Some restaurateurs said that food costs were increasing at a slower rate or leveled off after a period of rapid increases, and many contacts in other industries reported that the pace of cost increases continued to slow. Some manufacturers noted that they were starting to negotiate with suppliers to bring down costs, with one stating, “We have been able to partially roll back some select suppliers’ prices after two years of substantial price increases.” Still, many contacts across sectors continued to report cost increases for most services, including legal, accounting, and insurance services.

Selling prices continued to increase slightly, though most contacts indicated that they had not changed prices recently. Some firms did not adjust prices because they had previously implemented annual price increases, while others noted that increased competition prevented them from raising prices. One business services contact said that passing along cost increases had become more difficult as customers were more closely managing their costs. Some manufacturing, construction, and retail contacts increased prices selectively, while other retailers reported decreasing prices or offering larger discounts because of decreased demand.

Consumer Spending

Consumer spending declined modestly following modest increases during the prior reporting period. While restaurateurs reported stronger demand because of warmer weather, the bulk of retailers reported softer sales. Multiple retailers indicated that customer foot traffic was lower. Reports from auto dealers were mixed, with one reporting higher new vehicle sales because of more manufacturer incentives, while others continued to report slow sales because of high interest rates and vehicle prices. Retailers generally expected consumer spending to remain unchanged in the coming months.


On balance, demand for manufactured goods remained flat during this reporting period. Some manufacturers reported stronger orders related to ongoing federal spending or the construction of data centers. By contrast, others noted lower order volumes because of softer consumer spending or general economic and political uncertainty. For example, reports from primary and fabricated metals producers indicated lower order volumes because their customers faced softer demand or managed inventories cautiously because of uncertainty about how well demand would hold up in the coming quarters. Manufacturers generally expected demand to increase slightly in the coming months.

Real Estate and Construction

Residential home sales and construction increased at a modest pace in recent weeks, with one homebuilder indicating that “We're still writing contracts on houses, but it's not like it was when mortgage rates were lower.” Contacts expected demand to continue growing at a modest pace in the coming months. Still, as one contact stated, “It's all going to depend on interest rates. If they go down, business will get better. If rates stay the same, I don't expect any change.”

Nonresidential construction activity increased moderately in recent weeks. Construction firms experienced an uptick in activity for public projects, and another contact saw more demand related to green energy projects. By contrast, some commercial real estate developers reported that demand continued to be dampened by higher borrowing costs. On balance, contacts expected activity to continue at a moderate pace in the coming months.

Financial Services

Overall, bankers indicated that loan demand increased modestly. One banker reported that, because of elevated interest rates, “demand for loans remained steady although not robust.” Looking ahead, bankers expected loan demand to soften somewhat because of interest rate uncertainty. For example, one banker opined that loan demand would not increase further until households and businesses “get a better feel for the direction of our economy and [see] a cut in interest rates.” Core deposits were flat, and there was continued movement from traditional savings accounts into higher-interest accounts. Bankers reported that delinquencies were little changed and remained at generally low levels.

Nonfinancial Services

Professional and business services contacts reported that demand remained robust as businesses moved forward with technology upgrades and capital projects. Overall, contacts anticipated that demand would increase in the coming months; however, a couple of consultants expected clients to pull back on spending as the upcoming presidential election has increased economic uncertainty. Freight contacts reported that demand increased slightly in recent weeks. One hauler noted that, despite increasing truckload volumes, both contract and spot rates declined. In the months ahead, haulers anticipated that demand would be flat as clients work through inventories.

Community Conditions

Affordable housing developers said that demand remained high but that community opposition and difficulty accessing financing were slowing housing production and could shut down some projects in the region. One contact reported that rising housing and food costs negated wage gains for many low-wage and entry-level workers. Moreover, increased housing costs contributed to a recent uptick in delinquent utility bill payments, according to some contacts. In addition, a nonprofit contact observed growth in the entrepreneurship space as people sought access to multiple income streams to cover elevated costs.