Fed Beige Book: Economic growth stable, inflation easing
Fed stated that overall economic activity was little changed in recent weeks, with expectations of future growth mostly unchanged as well. Consumer spending was generally seen as flat to down slightly amid continued reports of moderate price growth. Employment growth moderated during the period with several Districts reporting a slower pace of growth than in recent Beige Book reports. Overall prices rose moderately during the reporting period, though the rate of price increases appeared to be slowing. Agricultural conditions were generally stable across the 12 Fed districts, though input costs, weather (drought and wintry weather) and other factors were listed as concerns.
Atlanta: Agricultural conditions were mixed. Domestic supplies of chicken exceeded demand as the Avian Flu limited exports. Though foreign demand for poultry improved as some countries loosened import regulations. Demand for eggs exceeded supply but softened in response to elevated prices. Cattle supply remained low, and beef producers expressed concerns that falling chicken prices may cause consumers to substitute chicken for beef. Demand for cotton and soybeans fell from already low levels. Reduced cotton plantings are expected this year as discretionary spending softens.
Chicago: With input costs remaining elevated and many product prices down, lower agricultural incomes are expected in 2023 compared with a strong 2022. Cattle prices increased as the U.S. herd was squeezed by a harsh winter. Egg prices rose while dairy and hog prices moved lower. Prices for agricultural land continued to increase, reportedly at a slower pace.
St. Louis: District agriculture conditions changed little from the previous report. Acres planted to corn, cotton, rice and soybeans increased around 1% compared with last year; outcomes were similar for all District areas. Cotton and soybeans were planted in lesser quantities, while corn and rice acreages increased.
Minneapolis: Agricultural conditions were stable at strong levels entering the planting season. Most contacts reported farm incomes continued to increase from a year earlier, while capital spending was steady. Though persistent wintry weather, including a severe snowstorm, has delayed preparation for spring planting in many areas.
Kansas City: The tenth District reported strong economic and credit conditions, noting elevated commodity prices continue to support profit opportunities for many producers. Farm loan repayment rates improved at a gradual pace in the first quarter and indicators of credit challenges were limited. Agriculture bankers throughout the region reported their liquidity position was adequate to meet current demand and deposit withdrawals, though the impact of higher interest rates on borrower finances and farmland markets is a growing concern. More broadly, drought and elevated production costs continued to affect many areas of the region.
Dallas: Drought conditions persisted in the western part of the district while soil conditions were quite favorable elsewhere. The La Niña pattern has ended, and rainfall is expected to increase moving into summer and fall. Cotton acres are expected to be significantly lower this year, with producers favoring crops with a relatively higher price and drought tolerance. Cattle prices increased dramatically over the past six weeks and were up from the same time last year, with demand remaining solid.
San Francisco: Activity in agriculture and resource-related sectors decelerated slightly. Exports of agricultural goods weakened, while domestic demand was mixed. Growers in the Pacific Northwest reported weaker sales overall, producers in California reported strong, stable demand for fresh produce and other agricultural goods. Persistent rains and flood conditions in California affected plant pollination, delaying the planting of crops such as tomatoes and cotton and casting doubt on the viability of some orchard crops.
