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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

Reports from Fourth District business contacts were consistent with generally flat aggregate economic activity, though conditions continued to vary by industry segment. While consumer spending appeared to firm somewhat from that of the prior period, it remained soft, and business spending was mostly flat. Concerns about developments in the banking industry reportedly had limited impact on recent business activity, though a small share of contacts reported a modest decrease in credit availability. However, many contacts indicated that these developments had increased uncertainty. Hiring slowed as firms’ demand for additional workers eased and as a larger share of contacts sought to reduce headcount. Labor availability appeared to increase, particularly for those seeking to fill lower-wage positions. Wage and other nonlabor input cost pressures continued to trend lower, while price pressures eased from those of the previous reporting period.

Labor Markets

Employment growth in the Fourth District appeared to be flat in recent weeks. The apparent easing in labor demand was illustrated in more-frequent reports of employers reducing staffing through attrition, hiring freezes, or layoffs. Moreover, some banking and manufacturing firms noted replacing only revenue-generating positions or hard-to-fill production positions while holding off on hiring support staff. Firms looking to increase staff more frequently stated that labor supply had improved recently. On balance, firms planned to maintain current staffing levels or selectively fill critical positions in the coming weeks.

The softer demand for labor and the increased labor supply were accompanied by further easing in wage pressures. The share of contacts that reported increased pay fell to 36 percent, the lowest share in more than two years. Moreover, 62 percent of contacts reported holding wages steady, many in response to declining margins or increased labor availability. Even so, many contacts across industries indicated that wage increases remained necessary to attract and retain skilled labor.


Nonlabor input cost pressures eased in recent weeks, continuing a trend that started last summer. Several contacts reported that their overall costs had flattened. One homebuilder said he recently started “pressing people to lower [their] prices but haven't had much success yet.” That said, contacts in construction and manufacturing noted that costs for steel and concrete products increased recently. One steel producer said that he expected steel costs to rise further in the second quarter, but he expected costs to fall in the third quarter. More broadly, contacts expected further relief from input cost pressures in the months ahead.

Overall selling-price pressures eased from those of the prior reporting period, but they varied across industries. On the one hand, natural gas prices fell amid mild winter and early spring weather, and freight prices decreased because of a drop in demand. On the other hand, some manufacturers said they continued to raise prices to “catch up” from the cost increases over the prior two years. Similarly, some retail contacts reported selectively raising prices to cover higher costs, though they did so cautiously to remain competitive.

Consumer Spending

Reports suggest that consumer spending firmed somewhat from that of the previous reporting period. Still, demand for discretionary items remained soft as households faced continued pressure from inflation and increased interest rates. One general merchandiser noted that higher prices for food and other essentials continued “eating up more of the customer’s wallet,” leading customers to favor lower-priced options such as generic brands. Auto sales dipped in part because increasing interest rates and higher vehicle prices pushed out of the market many buyers who want, rather than need, a new vehicle. One dealer hoped that more manufacturer incentives would increase demand, but he cautioned that higher credit standards had become an additional headwind for potential buyers. On balance, contacts expected consumer spending to remain stable in the coming months.


Overall demand for manufactured goods increased slightly from that in the previous period. Orders for aerospace-related products remained strong, but demand generally weakened for items from manufacturers tied to the housing and automotive sectors. Some manufacturers benefitted from an increase in international orders, particularly from Europe, Asia, and the Middle East. That said, heightened uncertainty tempered some manufacturers’ expectations because of a decrease in new orders and backlogs.

Real Estate and Construction

Demand for residential construction and real estate continued to be hindered by higher interest rates. One homebuilder stated, “As long as interest rates stay high, demand is going to be down. We’re still selling, but it’s down from where it was a year ago.” Given low inventories, some builders reported that demand for housing seems stronger than expected. Some builders are attempting to offset higher interest rates through various incentives, including rate buydowns.

Nonresidential construction and real estate contacts indicated that demand had changed little in recent weeks on balance. While a few contacts reported that projects had been put on hold, others indicated they have still been able to secure new projects. One general contractor noted that demand had remained stable, but projects were taking longer to get started because the firm had been spending more time working on budgeting issues in the preconstruction phase. Several contacts anticipated construction and leasing activity to soften further in coming weeks because of rising interest rates and banks’ tightening credit.

Financial Services

Overall, loan demand continued to decrease, albeit at a slower pace than in the prior period. Several bankers reported that recent developments in the sector added to heightened economic uncertainty that motivated customers to reach out about the safety of their deposits. Others posited that the increased uncertainty along with high interest rates had reduced borrowing. Lenders indicated that delinquency rates remained low for both commercial and consumer loans. Core deposits continued to decline, a situation which bankers attributed to rate competition among banks and to outflows to higher-yielding alternatives. Looking forward, loan demand was expected to soften further in coming months.

Nonfinancial Services

Freight activity declined this reporting period. One hauler mentioned that contract customers have cut back their orders and that the spot market for freight has also weakened. Contacts anticipated that freight demand would continue to decline. Generally, professional and business services contacts expected demand to be flat.

Community Conditions

Nonprofit contacts reported increased demand for their services over the past six months because of rising costs for food, shelter, and utilities. One contact noted that food pantry use is up 30 percent compared to prepandemic levels, and another mentioned an increase in the number of first-time users of food assistance. Several contacts said that homelessness was rising and that more families were moving in with relatives because of higher rents, increased evictions, and a shortage of affordable housing. According to multiple contacts, fewer landlords were accepting Section 8 vouchers, a situation which contributed to the housing shortage. Some contacts who offer loan products to households and businesses noted that rising interest rates increased the demand for their products. One community service provider saw a rise in applications for zero-interest, small-dollar loans, and a community development financial institution contact reported that more individuals were seeking funding through her enterprise because of higher interest rates at local banks.