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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, business activity in the Fourth District declined slightly in recent weeks, and contacts expected flat activity in the months ahead. The slowing in demand was apparent across sectors. Discretionary spending was down in particular for lower-income consumers, and some auto dealers and real estate contacts reported diminished activity. Moreover, demand for manufactured goods generally softened, even in previously strong industry segments. By contrast, business services activity remained robust, which some contacts attributed to spending moving forward on previously delayed capital projects. Employment levels were flat in recent weeks, as many firms focused on hiring only critical staff. On balance, wage and nonlabor input costs increased moderately, and selling prices grew modestly.

Labor Markets

Overall, contact reports suggested that employment was flat during the recent reporting period, with the majority of firms indicating that their overall staffing levels had not changed. Many contacts across sectors, citing decreased demand, noted they were hiring cautiously for key roles and, in some cases, only replacing critical staff. Some banking and healthcare contacts noted that the shortage of workers for specialized roles continued to limit their hiring. By contrast, some contacts reported hiring for product-line expansions, backlog reduction, and administrative support. Most contacts expected only slight growth in employment for their organizations in the near term.

Wage growth continued to be moderate in recent weeks. However, many contacts across industries continued to report that wage growth had stabilized and that annual wage adjustments were standard again. Some attributed this stabilization to increased labor availability and decreased turnover. Nevertheless, several retail and construction contacts noted increased employee pressure to raise wages to align with inflation. One contact said, “Workers have asked for increased compensation based on their challenges from inflation impacting their cost of living.”


Overall, nonlabor input costs increased moderately in recent weeks, similar to during the past several reporting periods. However, more than half of contacts continued to report no change in input costs. Some construction, manufacturing, and retail contacts reported that equipment, raw materials, and commodities costs were generally leveling off. These contacts attributed the stabilization of their costs to improved supply chains, lower industrial activity, and supplier discounts. Contact reports of increasing health insurance costs remained pronounced, and one banker said their premium level increased by 15 percent this year compared to an average of 1.6 percent annually over the past 10 years even after they “aggressively” shopped for healthcare plans.

Selling prices continued to grow modestly, although the majority of contacts indicated that they had not changed prices in recent weeks. Multiple retailers noted that passing along cost increases had become more difficult as customers “shop[ped] around” more for lower prices. To remain competitive, some manufacturing and freight contacts were holding prices steady, while others were offering discounts or reducing prices. Still, some contacts increased prices in areas with higher demand or for select customers. One construction contact said, “We continue to get a premium on our services due to the large amount of construction projects that are occurring throughout our footprint.”

Consumer Spending

Consumer spending declined modestly in recent weeks following a similar decrease in the prior reporting period. Overall, contacts indicated that discretionary purchases were down, in particular for lower-income households. One large retailer reported that lower-income consumers have forgone their stores in favor of lower-price point retailers. Restaurateur contacts generally noted that sales were flat. Auto dealers reported that sales were flat to down, with a couple indicating that elevated prices and interest rates deterred buyers. One auto retailer said that while vehicle supply and incentives had increased, affordability remained a headwind to sales. Broadly speaking, contacts expected consumer spending to be flat in the coming months.


Demand for manufactured goods declined modestly in recent weeks. Reports from multiple manufacturers indicated fewer orders because of softer residential and commercial construction activity or because of agricultural equipment producers’ adjusting their production levels down. Steel producers attributed fewer orders to customers’ postponing purchases because they expected steel prices to fall further. Moreover, demand in previously strong industry segments such as aerospace appeared to soften as well. On balance, manufacturers expected demand to decline slightly in the coming months.

Real Estate and Construction

Residential construction and real estate contacts reported a modest decline in demand for homes in recent weeks after a period of stable growth. Some homebuilders saw would-be homebuyers staying out of the market because of elevated mortgage interest rates. One residential real estate agent described “a reduced number of multiple offer situations” for existing home sales as evidence of fewer potential buyers. Overall, contacts expected demand to decrease at a modest pace in the coming months.

Nonresidential construction activity declined moderately over the last two months. Higher financing costs discouraged new construction projects, and one contact noted that large infrastructure projects were “in a holding pattern” because of elevated interest rates. However, several builders reported stable, strong demand. While one general contractor mentioned “significant potential projects” in the pipeline, contacts generally anticipated a continued moderate decline in demand over the months ahead.

Financial Services

Bankers reported that loan demand growth was relatively flat from both households and businesses as potential borrowers were discouraged by elevated interest rates. In particular, community bankers noted a pullback in loan demand from small businesses and households. A couple of bankers also noted slower-than-expected seasonal lending activity. Looking ahead, bankers anticipated that loan demand would decline slightly. Core deposits were flat, as a number of bankers increased deposit interest rates to prevent attrition. Bankers indicated that delinquencies remained at low levels.

Nonfinancial Services

Professional and business services firms reported robust demand in recent weeks. Contacts expected strong demand to continue over the coming months, as previously delayed capital projects were recently moved forward; one contact noted that clients had previously delayed projects in anticipation of a reduction in interest rates that has yet to materialize. Another contact noted that federal funding associated with the Inflation Reduction Act had increased demand for the firm’s services. Freight contacts reported that demand grew modestly in recent weeks. In the coming months, freight contacts anticipated that demand would continue to grow.

Community Conditions

Contacts reported that elevated rents and food prices continued to stress low- and moderate-income households’ budgets. Several contacts said that demand increased for their emergency assistance programs over the last couple of months, with requests for food, housing, and utility assistance topping the list. To cope with increased demand for their services, one food bank contact mentioned handing out less food per visit to stretch their supply, while another contact shared that their organization was spending from reserves. Other contacts observed an increase in homelessness and noted that some households had their adult children and extended family members move in with them to ease some of the financial burden.