Beige Book: Region's Economy Expands as Employment, Prices Hold Steady
The Southeast economy grew slightly during October and the first half of November, as labor market conditions continued to normalize and prices remained broadly stable, according to the new Beige Book report on economic conditions from the Federal Reserve Bank of Atlanta.
Employment across the region remained mostly steady since the previous Beige Book report, as the pace of hiring was gradual, and employers often brought on staff only to fill open positions. In the same vein, a lot of companies said they plan to hold employment levels constant into 2025. Some reported plans to cut staff a bit, but mainly through attrition as opposed to layoffs. In the healthcare sector, there were reports of expanding hiring.
The Federal Reserve has a dual mandate to pursue maximum employment and price stability. Concerning the latter half of the mandate, costs that businesses paid for inputs into their operations and prices were relatively unchanged from the previous six-week period. The cost of construction materials continued to stabilize, with lumber reaching a four-year low and steel returning to historical norms.
Atlanta Fed contacts generally said rent, food, and utilities costs were flat or a tad lower. However, hurricanes and other bad weather spurred concerns about crop damage that could affect future food supplies. Insurance premiums remained the most frequently cited inflationary pressure.
In other sectors:
- Even amid sustained demand for affordable rental housing, developers reported challenges with fully financing projects.
- Many retailers raised expectations from a few months ago and were increasingly optimistic about a solid 2025. Merchants generally said promotions worked and that customers were more willing to spend when prices were right.
- Tourism declined modestly after an unusually busy 2022. Some contacts noted subdued spending by lower- and middle-income travelers, who are more often choosing to rent a home for multiple families and to dine in rather than eat out.
- Though stable or slightly up in most of the Southeast, home sales in Florida declined sharply in October from the same month a year earlier. Supplies of existing homes for sale also increased in many Florida markets, with some—most notably in southwest Florida—now considered oversupplied.
- Demand for transportation services edged up, as railroads reported increases in traffic and seaports noted higher volumes of containers.
- Despite a modest decline in activity, manufacturers said their outlook for the next 12 months was cautiously optimistic.
- Financial institutions reported modest loan growth but expect demand to ramp up as short-term interest rates decline.
- As the broad energy sector grew only modestly, demand for electricity and renewable energy sources was described as robust and growing. Growth in electricity demand is coming mainly from data center projects.
The Federal Reserve System and the regional reserve banks publish the Beige Book before each meeting of the Federal Open Market Committee. The Committee next meets December 17 and 18.
Charles Davidson
Staff writer for Economy Matters