Fed Beige Book Survey Warns About Slowing Economy

(KNSI) – Federal Reserve staff are sounding the alarm on the economy in what is known as the Beige Book update.

Published eight times a year, it guides the Open Market Committee when making interest rate decisions. St. Cloud State University Economist King Banaian says the Minneapolis bank survey responses in May were very pessimistic.

“I just did some pull quotes from the Minneapolis portion of the piece. Winery in central Minnesota, ‘A lot more applications for part-time and seasonal workers this year.’”

Minnesotans are having to take on additional jobs to make ends meet as inflation continues to hammer the consumer. Banaian says it doesn’t stop with that one example.

“Another winery and restaurant saying they’re seeing lower average spending among patrons. ‘Guests are being very careful with their money. We see less of our regulars and more moderate spending.’”

Banaian says another interesting response is concern over internship openings. Banaian notes that with so many people working remotely, there are not enough supervisors to oversee college students and recent grads at the job site. He presented Thursday afternoon on the results at a local event.

The May Beige Book was released a day before first quarter GDP was revised down to only 1.3% growth. The first estimate was at 1.6%.

Several retailers have warned about profitability. Kohl’s stock fell almost 23% on Thursday alone due to decreased guidance. Automakers are also saying they will need to bring back incentives as inventory begins to pile up on dealer lots. Commercial real estate, particularly offices, was also listed as a drag on the economy.

You can read the Beige Book survey results here.

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