Current Release
Officially known as the Summary of Commentary on Current Economic Conditions by Federal Reserve District, the Beige Book is a report published eight times per year on scheduled days. The 12 Federal Reserve Banks gather anecdotal information on current economic conditions in their respective Districts from business contacts, economists, market experts, community organizations, and other sources. The Beige Book contains a summary of the information written by each District’s Reserve Bank, as well as an overall summary of the District-level reports prepared by one of the Reserve Banks on a rotating basis.
The report on this page is the Chicago Fed’s latest contribution to the Beige Book. For the latest full report and for the archive of past full reports, visit the Board of Governors of the Federal Reserve System site.
October 2024
Summary of Economic Activity
Economic activity in the Seventh District increased slightly overall over the reporting period, and contacts expected a similar increase in activity over the next year. Consumer spending rose modestly; employment was up slightly; construction and real estate activity was flat; nonbusiness contacts saw little change in activity; and business spending and manufacturing activity edged down. Prices were up modestly, wages rose moderately, and financial conditions loosened slightly. Prospects for 2024 farm income were unchanged.
Labor Markets
Employment rose slightly and contacts expected growth to continue at a similar pace over the next 12 months. There were continued reports of difficulty filling higher skilled positions, particularly from manufacturers. Some contacts were also concerned that construction workers were going to be pulled away from projects to support rebuilding after the recent hurricanes. However, many contacts noted softening in the labor market, with several of these reporting an increase in the number of applicants to open positions. A staffing firm contact saw a slowdown in hiring, particularly by auto and furniture manufacturers. Additionally, a number of contacts in finance and construction said they were not hiring or replacing employees who leave. Wages and benefits costs continued to rise moderately, though contacts indicated growth was noticeably slower than a year or two ago. One machinery manufacturing contact said that prospective employees haven’t been negotiating over wages for about a year.
Prices
Prices increased modestly overall over the reporting period and contacts expected a similar rate of increase over the next 12 months. Producer prices moved up modestly. Nonlabor input costs continued to rise, including for energy, raw materials, and shipping. Several contacts also noted a pickup in the cost of insurance and complying with new regulations. Consumer prices again rose modestly overall.
Consumer Spending
Consumer spending increased modestly overall. Contacts noted that customers across all income segments were “trading down.” For example, low- and moderate-income consumers were picking cheaper value meals over more expensive combo meals at fast food restaurants, while high-income consumers were choosing more affordable furniture and appliances. Nonauto retail sales increased modestly. Declines in sales of appliances and home-improvement items were more than offset by greater sales at discount stores and of streaming services and expensive sports equipment, such as boats and snowmobiles. Leisure and hospitality spending was unchanged. Light vehicle sales increased slightly, with growth in both the affordable and luxury segments, but a decline in mid-size SUVs and trucks. Dealers in Iowa and Wisconsin noted that to save money, farmers were opting for used heavy trucks over new ones.
Business Spending
Business spending decreased slightly on balance over the reporting period. Capital expenditures moved down slightly. Demand for truck transportation declined further, though truck freight rates held steady. Retail inventories were a little elevated. Many retailers had built up inventory in anticipation of the International Longshoreman’s Association strike at East and Gulf coast ports. Because the strike ended quickly, contacts expected minimal disruptions. Auto inventories were a bit low, and one contact noted that their used vehicle inventory was down significantly. Manufacturing inventories were a little high. There were few reports of input shortages, though contacts said there was the potential for shortages of building materials given the need for rebuilding after recent hurricanes in other Districts.
Construction and Real Estate
Construction and real estate activity was unchanged on net. Residential construction activity was flat. In a recent homebuilders’ survey, a majority of respondents expected national housing starts to end the year higher than last year and expected a further increase in 2025. Residential real estate activity was little changed overall, though rent and home prices increased slightly. Demand for starter homes was up, while demand for middle-market homes eased. Contacts indicated that higher property taxes and homeowner insurance rates were barriers to buyers entering the market. Nonresidential construction increased slightly. Contacts highlighted ongoing healthcare, data center, and electric vehicle battery plant projects. Commercial real estate activity was unchanged, as prices held steady and rents decreased a bit. Vacancy rates and the availability of sublease space ticked up.
Manufacturing
Manufacturing demand decreased slightly over the reporting period. Orders for steel ticked down on balance, as decreases from the heavy equipment, energy, and automotive sectors outpaced increased demand for infrastructure and data center construction. Fabricated metals orders were down slightly, in part due to slowdowns in residential construction and heavy machinery manufacturing. That said, several contacts noted increases in demand from the defense sector as well as for products destined for rebuilding efforts after the hurricanes. Machinery sales decreased slightly, auto industry contacts saw a dip in demand, and heavy truck demand fell modestly. A contact in the heavy truck industry expected a further drop in demand over the next few months.
Banking and Finance
Financial conditions loosened slightly on balance. Bond values were up some, as were equity values. Volatility increased slightly on net. Business loan demand edged up, though one banking contact highlighted a decline in lending to the heavy equipment sector. Business loan rates decreased modestly, but terms were unchanged. Business loan quality moved down slightly. Consumer loan volumes rose slightly, in part due to greater mortgage demand. Consumer loan rates edged down and terms were stable. Consumer loan quality decreased slightly.
Agriculture
Farm income expectations for the District were stable over the reporting period despite prospects for above-average corn and soybean harvests. Dry weather helped reduce crop drying costs but also led to lower crop weights, cutting into potential revenue. Corn and soybean prices increased slightly, and farmers were maximizing crop storage in hopes of selling later at higher prices. Cattle prices increased as the inventory of cattle continued to fall, reaching its lowest point since the 1950s. Dairy prices rose some, while egg prices ticked down. Hog prices were steady. Agriculture transportation faced several logistical disruptions, including constrained rail traffic to Mexico and barge slowdowns from low water levels on the Mississippi River. There were reports of agriculture equipment and input sellers offering low- and even zero-interest loans to spur sales.
Community Conditions
Community, nonprofit, and small business contacts saw little change in economic activity but were slightly optimistic about future economic conditions. State government officials again saw healthy growth in tax revenues. Small business contacts in affordable housing development commented that persistent high costs, including labor and insurance, continued to squeeze profit margins and disrupt project plans. Philanthropic leaders noted increases in grant requests, as nonprofit grantees sought to manage higher operating costs and meet basic community needs, including food. Community contacts also reported increases in homelessness as well as utility arrearages, both indicators of the housing challenges faced by low-income community members.
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