According to the Fed’s recent Beige Book report, US economy experienced slight growth at the beginning of the year. However, consumers’ purchasing power and discretionary income have been affected by high inflation and higher interest rates. The labor market conditions were solid, with moderate wage increases expected in the coming year. Inflationary pressures persisted throughout various districts, but the rate of price increases has moderated, with many contacts anticipating this trend to continue.
Overall economic activity “increased slightly” in early 2023 with six of twelve districts reported that activity ” expanded at modest pace”. Several districts said “high inflation and higher interest rates continued to reduce consumers’ discretionary income and purchasing power”. Manufacturing activity “stabilized following a period of contraction”.
Labor market conditions “remained solid” while ages “generally increased at a moderate pace”. Wages increases are expected to “moderate further in the coming year”.
Inflationary pressures “remained wide spread” but price increased “moderated” in many districts. Looking ahead, “contacts expected price increases to continue to moderate over the year.”