Overall Economic Activity
Overall economic activity increased slightly in early 2023. Six Districts reported little or no change in economic activity since the last report, while six indicated economic activity expanded at a modest pace. On balance, supply chain disruptions continued to ease. Consumer spending generally held steady, though a few Districts reported moderate to strong growth in retail sales during what is typically a slow period. Auto sales were little changed, on balance, though inventory levels continued to improve. Several Districts indicated that high inflation and higher interest rates continued to reduce consumers' discretionary income and purchasing power, and some concern was expressed about rising credit card debt. Travel and tourism activity remained fairly strong in most Districts. Manufacturing activity stabilized following a period of contraction. While housing markets remained subdued, restrained by exceptionally low inventory, an unexpected uptick in activity beyond the seasonal norm was seen in some Districts along the eastern seaboard. Commercial real estate activity was steady, with some growth in the industrial market but ongoing weakness in the office market. Demand for nonfinancial services was steady overall but picked up in a few Districts. On balance, loan demand declined, credit standards tightened, and delinquency rates edged up. Energy activity was flat to down slightly, and agricultural conditions were mixed. Amid heightened uncertainty, contacts did not expect economic conditions to improve much in the months ahead.

Labor Markets
Labor market conditions remained solid. Employment continued to increase at a modest to moderate pace in most Districts despite hiring freezes by some firms and scattered reports of layoffs. Labor availability improved slightly, though finding workers with desired skills or experience remained challenging. Several Districts indicated that a lack of available childcare continued to impede labor force participation. While labor markets generally remained tight, a few Districts noted that firms are becoming less flexible with employees and beginning to reduce remote work options. Wages generally increased at a moderate pace, though some Districts noted that wage pressures had eased somewhat. Wage increases are expected to moderate further in the coming year.

Prices
Inflationary pressures remained widespread, though price increases moderated in many Districts. Several Districts reported input costs rose further, particularly for energy and raw materials, though there was some relief reported for freight and shipping costs. Some Districts noted that firms were finding it more difficult to pass on cost increases to their consumers. Selling prices increased moderately in most Districts, with several Districts noting a deceleration. Home prices were generally flat or down slightly, while rents were reported to be steady or higher. Still, home prices and rents remained high, contributing to ongoing concerns about housing affordability. Looking ahead, contacts expected price increases to continue to moderate over the year.

Highlights by Federal Reserve District
Boston
Business activity increased slightly on average. Retailers and restaurant owners reported modestly higher sales, and manufacturers reported a slightly slower pace of activity. Employment was about flat as wage growth remained above average. Prices increased slightly as nonlabor costs continued to ease. Contacts expected at least modest price increases in 2023.

New York
After a sharp contraction, regional economic activity leveled off. The labor market has remained strong, with ongoing slight job gains and a pickup in wage growth. Inflationary pressures remained persistent as price increases picked up. Housing markets remained subdued but showed signs of picking up beyond the seasonal norm.

Philadelphia
Business activity appeared to increase slightly during the current Beige Book period after declining last period. In the absence of a definitive COVID-19 wave, consumers responded positively. Employment rose modestly. Wage growth and price inflation continued to subside but still grew at moderate paces. Expectations improved despite continued cautious sentiment.

Cleveland
The District's economy contracted slightly early in 2023, in large part because higher interest rates and prices continued to weigh on household spending. Contacts in other sectors, including freight and manufacturing, often cited the weakness in household spending as contributing to softer demand in their own industries. Firms added workers at a slower pace as many expected softer business conditions to persist in the months ahead.

Richmond
The regional economy grew at a modest rate in recent weeks. Retail spending, travel, and tourism picked up moderately while nonfinancial service and residential real estate activity picked up modestly. Manufacturing and commercial real estate activity was unchanged. Lending volumes and transportation contracted modestly. Employment and wages grew modestly. Price growth slowed slightly but remained elevated.

Atlanta
Economic activity grew modestly. Labor markets improved slightly, but wage pressures persisted. Some nonlabor costs rose while others moderated. Retail sales were healthy. Auto sales were strong. Leisure travel was robust and business travel grew. Housing demand improved somewhat. Transportation was mixed. Loan growth was solid. Energy demand was strong. Agriculture activity remained mixed.

Chicago
Economic activity increased. Employment increased moderately; consumer spending increased modestly; business spending and manufacturing increased slightly; nonbusiness contacts saw little change in activity; and construction and real estate activity decreased modestly. Prices and wages rose moderately, while financial conditions were unchanged. Agricultural incomes were expected to be lower in 2023 than in 2022.

St. Louis
Economic conditions have remained unchanged since our previous report. Firms reported tight labor markets but slowing wage growth. Consumer demand was mixed but came in slightly above expectations. Homebuying activity slowed, but demand for commercial and industrial space grew.

Minneapolis
Economic activity in the region grew modestly in recent weeks. Employment gains were moderate, and recruitment improved some. Price increases were modest and wage pressures were flat. Consumer spending declined, and struggles for construction and real estate firms continued. Minority-and women-owned firms reported steady activity but struggled with hiring.

Kansas City
Economic activity in the Tenth District declined slightly in February. Employment levels remained high and labor markets tight. Yet, overtime hours, hiring of temp workers, and job postings declined. Consumer spending continued to fall, primarily due to reduced discretionary spending, as spending on food, energy, and healthcare continued to rise. Prices rose broadly at a moderate pace, but rental rates for housing continued to increase at a robust pace.

Dallas
Modest economic growth continued, with a pickup in home sales and service sector activity but a slight contraction in manufacturing output. Job growth was moderate, and labor market tightness eased. The pace of input and selling price increases generally remained elevated. Outlooks were mostly negative, and contacts voiced concern about weakened demand, inflation, and higher interest rates.

San Francisco
District economic activity expanded modestly. Labor supply ameliorated, while wage and price growth moderated further. Demand for retail goods and services was strong. Manufacturing activity was unchanged on net, while conditions in the agriculture sector softened slightly. Residential real estate activity eased further, while demand for commercial spaces changed little. Lending activity rose slightly.