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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 the surface, business activity in the Fourth District was little changed from that of the prior reporting period, though there were some notable shifts in industry conditions. Consumer spending softened in recent weeks after firming during the previous three periods. Similarly, demand for manufactured goods decreased slightly, a situation which many contacts attributed to continued inventory correction. Meanwhile, freight activity appeared to stabilize, though it remained weak. Nonresidential construction activity increased, and contacts reported that clients were moving ahead with new and previously postponed projects. Looking forward, contacts generally expected little change in overall business activity in the near term. On balance, contact reports suggested that employment increased slightly. Many firms reported that hiring was easier and turnover had declined. Upward pressures on wages, nonlabor input costs, and prices were relatively unchanged from those of the previous reporting period, but, in each case, these have eased considerably from those of the prior year.

Labor Markets

On balance, Fourth District employment increased slightly, though contact reports varied more than in the recent past. On one hand, some manufacturing, construction, and freight contacts increased staffing levels in key areas to reduce backlogs, handle new projects, or meet higher-than-expected demand. On the other, some manufacturing and financial services contacts reported increased layoffs and cited tight margins and declining demand. Moreover, several firms that were trying to reduce staffing through attrition said that lower turnover prevented them from doing so; thus, they were forced to lay off workers. Several contacts noted that hiring had become less difficult. Contacts generally expected employment to continue increasing slightly in the near term.

Wage pressures have eased since the start of the year, though they changed little from those in the prior period. Firms across industries more frequently reported transitioning from previous unscheduled cost-of-living increases to regular annual wage increases. One tourism contact said there would be “no across the board increases like last year” because he was able to be selective when increasing pay.


Similar to wage pressures, nonlabor input cost pressures changed little from those in the prior period, though they have eased since the start of the year. On balance, contacts across industries noted a “leveling off” of costs. Per one construction contact, “nobody’s raising prices, nobody is decreasing [them].” Some manufacturers stated that costs for many materials, such as resins, were flat, while costs for other materials, such as steel and lumber, had declined. Looking forward, contacts expected that nonlabor input cost pressures would continue to ease.

General price pressures were largely unchanged from those in the prior reporting period. However, compared to the number of contacts early in the year, a narrower set of contacts was willing (or able) to push through price increases. Many contacts reported increased price sensitivity among their clients, and some freight contacts reported increasing some price concessions to remain competitive. One freight hauler said, “Even our best customers are regularly seeking rate concessions.” That said, several manufacturing and construction contacts raised prices to cover increased costs.

Consumer Spending

Consumer spending softened somewhat in recent weeks. Goods spending remained weak amid high interest rates’ dampening sales of big-ticket items and elevated prices’ constraining discretionary spending. Auto dealers said that sales slowed because of higher interest rates and that inventories had increased. Moreover, some said that the pent-up demand built during pandemic-era supply shortages had been mostly exhausted. A large general merchandiser noted that discretionary goods spending was down as customers continued to spend more on food and other essentials. By contrast, apparel retailers reported steady or strong sales, and one noted that back-to-school sales had increased from those of the prior year. Services spending moderated compared to that in recent reporting periods, with, for example, restauranteurs’ reporting generally flat sales. Looking ahead, contacts expected demand to change little in coming months.


Demand for manufactured goods decreased slightly. Some contacts reported that new orders had declined as pandemic-era supply shortages subsided and customers no longer needed to keep excess inventory. By contrast, steel manufacturers generally reported steady or increased orders following an expected seasonal slowdown spanning the first half of July. One manufacturer tied to light vehicles noted stronger orders because of increased vehicle production by auto manufacturers. On balance, manufacturers expected customer demand to remain soft in the coming months.

Real Estate and Construction

New home sales remained strong, though one contact suggested that construction was slowing because “interest rates have finally taken their toll” and discouraged developers from investing to create buildable lots. This contact indicated that slower construction would exacerbate an ongoing severe shortage of inventory on the existing side, something which had been constraining sales for several quarters. In the coming months, contacts generally expected demand to decline in the face of elevated interest rates and higher home prices.

Nonresidential construction activity increased somewhat. Multiple general contractors reported new projects, stronger backlogs, or past clients’ decisions to proceed with previously postponed plans. Demand for office space remained weak, but one contact noted that the return of more workers to the office boosted the firm’s commercial leasing activity. Nonresidential construction and real estate contacts expected activity to be stable in the months ahead.

Financial Services

Bankers indicated that higher interest rates and economic uncertainty continued to dampen loan demand from households and businesses. One lender reported that many firms were opting to “wait and see” before moving forward with projects. Overall delinquency rates remained near historically low levels, despite some bankers’ reporting slight increases in delinquencies. Core deposits declined slightly as customers spent down their balances or sought higher-yield alternatives. In the months ahead, lenders expected loan demand to remain flat and higher interest rates to discourage borrowing.

Nonfinancial Services

Freight activity remained tepid this reporting period. Haulers reported that weaker demand for consumer goods and firms’ desire to draw down inventories contributed to ongoing weakness in the sector. However, contacts indicated that conditions stabilized somewhat compared to those in previous reporting periods and were optimistic that volumes would increase in the coming months ahead of the holiday season. Overall, professional and business service contacts reported that demand increased recently. In the months ahead, contacts anticipated that demand would be relatively flat as clients curtailed spending in the face of economic uncertainty.

Community Conditions

Nonprofits noted increased demand for their services. For example, one entity providing mental health and addiction treatment services received 50 applications for just two openings in the program, with wait times as long as nine months. Several nonprofits said that hiring and retaining staff had been particularly challenging, and one large community service provider reported that it was 40 workers shy of its desired staffing level of 170. Contacts cited three primary reasons for the hiring challenges. First, pay rates among nonprofit entities were not competitive with those in the for-profit world. Second, limited childcare and transportation options were more likely to adversely affect workers in the nonprofit sector. Third, funders often earmarked dollars for the provision of services without earmarking accompanying funding for overhead. For example, donations to food banks were often reserved for the purchase of food, but not for the overhead associated with getting the food to those in need. One contact noted that what was needed were unrestricted funds to cover operational costs, including those for staffing.