Overall, economic outlooks grew more pessimistic due to rising uncertainty and downside risk, according to the Fed Beige Book report released Wednesday.

Overall Economic Activity

National economic activity expanded from early April to mid-May, with most districts reporting slight or modest growth, though two noted no change.

Retail spending was flat to slightly up, and auto sales were stable, with some manufacturers offering incentives. Travel and tourism improved, but the hospitality sector had mixed summer outlooks. Tight credit standards and high interest rates constrained lending growth, while housing demand rose modestly.

Labor Markets

Employment rose slightly overall, with eight districts reporting negligible to modest job gains and four reporting no changes.

Labor availability improved, though some shortages persisted in certain industries or areas. Employee turnover decreased, increasing employers' bargaining power. Hiring plans varied, with some districts expecting modest job gains and others noting reduced hiring expectations due to weaker business demand and economic uncertainty. Wage growth remained moderate, with several districts noting it had returned to pre-pandemic levels.

Prices

Prices increased modestly, with most districts noting consumer resistance to further price hikes, resulting in smaller profit margins despite rising input costs.

Retailers offered discounts to attract customers. Input costs, especially insurance, continued to rise, though some construction materials and manufacturing raw material costs saw declines. Price growth is expected to remain modest in the near term.

Source: Fed Beige Book