Skip to:
  1. Main navigation
  2. Main content
  3. Footer

Fourth District Beige Book

The Beige Book, released 8 times a year, contains reports of economic conditions across the United States by region. Reports are based on information gathered primarily through interviews with business people and are prepared by each of the 12 Federal Reserve Banks for their respective Districts.

Summary of Economic Activity

Fourth District business activity changed little in recent weeks, on balance, though it varied considerably by sector. On the one hand, contacts said that higher interest rates dampened demand in rate sensitive sectors such as automobile sales, residential real estate, and nonresidential construction. On the other hand, manufacturers experienced increased demand with some reportedly benefitting from inventory replenishment and easing supply chain disruptions (which have not yet normalized), and professional and business services firms reported further increases in demand from already high levels. Looking forward, firms were generally more pessimistic about the near-term outlook than during the prior reporting period, a situation which likely contributed to lowered capital spending plans as well. Labor demand was solid, although fewer contacts reported adding staff to their payrolls than in the previous period. While cost and price pressures remained high, contacts again reported modest relief in recent weeks.

Labor Markets

Employment continued to increase, albeit at a slower pace. Slower employment growth in recent cycles is mostly a function of fewer firms adding to their staffing levels and more holding steady. A much larger share of contacts (roughly 60 percent, on average) indicated that staffing levels were unchanged in the September–October timeframe, compared to the share in the first quarter, when roughly 40 percent reported the same. One logistics contact said, “We would normally be hiring more people at this time but economic uncertainty has put our expansion plans on hold.” A small (15 percent) but increased share of contacts reported reducing their staffing levels, and nearly half of these were in construction. Looking forward, the net share of contacts planning to add staff in coming months remained positive, but smaller than during prior periods.

Wage pressures remained elevated. After trending down through much of the year, the percentage of contacts reporting higher wages was unchanged in recent weeks, at a little more than 50 percent. Contacts indicated that wage increases remained necessary to retain talent amid a shallow pool of labor, which one described as “more of a puddle than a pool.” Several contacts said that labor markets are still tight and likely to remain so, keeping upward pressure on wages for the near future.


Cost pressures remained high, though they eased further in recent weeks. The share of contacts reporting higher costs was unchanged from the prior reporting period, but the share reporting a decline in input costs was at its highest in more than two years. Among the latter was a national retailer who said that product costs were still high, but lower than in the early spring and summer. Freight costs, which have been a pain point for most firms, continued to fall. In many cases in which firms’ overall input costs rose, the rate of increase slowed. As one manufacturer stated, “material prices have leveled off and we are not seeing the large increases we were seeing in the first and second quarters.”

Selling price pressures remained elevated though they too lessened further recently. The share of contacts reporting an increase in selling prices dipped below 50 percent for the first time since April 2021. However, the relief was uneven. One manufacturer acknowledged that the firm was raising prices for smaller customers more so than for large companies, and a freight hauler noted that prices were falling in some regions while rising in others. In addition, a national discount retailer said that prices had come down in areas where demand had fallen, even as its costs remained higher.

Consumer Spending

Retailers reported weaker sales as consumers cautiously managed their budgets because of rising food and gas prices. One general merchandiser noted consumers continued trading down on items, most recently to canned goods from fresh foods. On balance, restauranteurs and tourism contacts reported that sales increased from those during the summer months. Still, some reported guest counts had slowed, and that consumers had less spending power because of inflation. Auto dealers reported flat or decreasing sales, noting that consumers had become wary of higher payments because of increased interest rates and higher vehicle prices.


On balance, demand for manufactured goods strengthened, with several contacts noting that sales had increased compared with those of previous months. Some reportedly benefitted from inventory replenishment and easing supply chain disruptions. Still, the largest share of contacts said demand was unchanged. Supply chain disruptions persisted, and while some contacts indicated that these disruptions had eased somewhat, they remained far from normal. Manufacturers’ expectations for the coming months were mixed, with some expecting continued easing of supply chain issues that would boost demand and others predicting a decline in activity.

Real Estate and Construction

Residential construction and real estate activity declined further as interest rates increased and buyer confidence weakened. One real estate agent noted that increased mortgage rates have greatly impacted entry-level homebuyers, while declines in the stock market have reduced the amount of funds available for higher-income homebuyers. Residential construction contacts reported that new home sales also continued to fall. One homebuilder stated that, “I think we are seeing the downturn we have been expecting and hearing of elsewhere for some time.” Contacts did not expect demand to recover anytime soon because interest rates were expected to continue rising.

Demand for nonresidential construction and real estate also weakened amid rising interest rates and elevated construction costs. One general contractor noted that his firm’s clients have begun to delay plans for new projects as interest rates and inflation continued to rise. Despite a slowdown in construction and sales activity, leasing activity has remained strong, particularly for industrial space. Going forward, contacts anticipated demand would continue to decline as interest rates increase further and consumers reduce spending.

Financial Services

Overall growth in lending stalled during the reporting period. While bankers noted that commercial lending remained strong, contacts reported that high interest rates continued to dampen demand for new residential mortgages and refinancing, and for auto loan originations. Lenders indicated that delinquency rates for commercial and consumer loans were still low, although a few bankers noted a slight uptick in delinquencies on auto and small-business loans. Contacts reported that consumer deposit balances decreased slightly, and some bankers indicated that customers were moving deposits to higher-yield accounts. Bankers expected overall loan demand to decline in the near term because of interest rate expectations.

Nonfinancial Services

Demand for professional and business services remained strong while demand for freight services weakened further. Professional and business services firms reported that demand for digital authentication services and software solutions remained robust. In particular, one contact noted an increased need for fraud prevention systems. Contacts anticipated demand for their firms’ products and services would remain strong going forward. Freight contacts reported a decline in demand and overall orders. One freight contact attributed the softening in demand to clients having caught up on their order backlogs. Freight firms expected demand will decline further.

Community Conditions

According to a semiannual survey of nonprofit service providers, low- and moderate-income households saw modest deterioration in their financial wellbeing and affordable housing conditions over the past six months. Roughly one-third of respondents said inflation contributed to the decline in financial wellbeing, with one respondent stating that higher prices “caused families to make different decisions regarding expenses, particularly food and travel.” Several contacts noted that affordable housing options were being lost to out-of-town investors who were buying existing rental properties and increasing rents. In eastern Kentucky, contacts noted that the scarcity in affordable housing was exacerbated by July’s flood. Job availability remained elevated even though a slightly higher share of survey respondents indicated that it had eased somewhat.