There was something odd about the latest Beige book (which was prepared based on information collected on or before April 8, 2024, so before the latest CPI print): if accurate, it would suggest that the rosy economic picture painted by the White House is woefully incorrect, whether on purpose or not (spoiler alert: it is on purpose).
Reading the Beige Book, we find that contrary to the official GDP print which claims the economy is cruising at a brisk 3%, ten out of twelve Districts experienced "either slight or modest" economic growth, while the other two reported no changes in activity.
What is more concerning for the economy where spending amounts for 70% of all economic growth, the Beige Book found that consumer spending "barely increased" overall, but reports were quite mixed across Districts and spending categories:
Next, we turn to employment, where contrary to the BLS claims that jobs are soaring month after month (even if they are all part-time workers, mostly going to illegal aliens), the Beige Book found that employment rose at a slight pace overall, with nine Districts reporting very slow to modest increases, and the remaining three Districts reporting no changes in employment.
Not surprisingly, most Districts noted increases in labor supply - which makes sense in a country where 10 million Biden voters illegals have entered in the past year. Yet despite the improvements in "labor supply", many Districts described persistent shortages of qualified applicants for certain positions, including machinists, trades workers, and hospitality workers. Guess you can only have so many gardeners and construction workers. Several Districts reported improved retention of employees, and others pointed to staff reductions at some firms.
There's more: contrary to the surging wages of the post-covid era, the Beige Book found that Multiple Districts said that annual wage growth rates had recently returned to their historical averages. On balance, contacts expected that labor demand and supply would remain relatively stable, with modest further job gains and continued moderation of wage growth back to pre-pandemic levels.
Last but not least, the Beige Book commented on inflation and found that price increases were modest, on average, running at about the same pace as in the last report, as disruptions in the Red Sea and the collapse of Baltimore's Key Bridge caused some shipping delays but so far did not lead to widespread price increases. Movements in raw materials prices were mixed, but six Districts noted moderate increases in energy prices. Another widely known fact: several Districts reported sharp increases in insurance rates, for both businesses and homeowners.
Most ominously, another frequent comment was that firms' ability to pass cost increases on to consumers had weakened considerably in recent months, resulting in smaller profit margins. That's hardly the stuff soft- or no-landings are made of.
Inflation also caused strain at nonprofit entities, resulting in service reductions in some cases.
On balance, contacts expected that inflation would hold steady at a slow pace moving forward. At the same time, contacts in a few Districts—mostly manufacturers—perceived upside risks to near-term inflation in both input prices and output prices.
Turning to the specific regional Feds, we found these summaries notable:
More in the full beige book