According to the latest Beige Book update from the Federal Reserve, the economy is facing several challenges. St. Cloud State University Economist King Banaian highlighted some of these concerns during a local event. For example, central Minnesota businesses reported an increase in applications for part-time and seasonal workers, indicating that they need more jobs to keep up with inflation.
Another concerning trend mentioned in the update was a decrease in average spending by patrons at a winery and restaurant in May. Customers are being more cautious with their money, resulting in less regulars and moderate spending. Additionally, there is a shortage of internship supervisors due to remote work arrangements, which is impacting college students and recent grads seeking work experience.
The release of the May Beige Book coincided with a revision of first-quarter GDP growth to 1.3%, lower than the initial estimate of 1.6%. Retailers like Kohl’s have reported decreased profitability, leading to stock price declines. Automakers are expected to reintroduce incentives as inventory piles up on dealer lots. Commercial real estate, especially office spaces, is also dragging down the economy.
Banaian presented the survey results at a local event and shed light on the various challenges and issues highlighted in the Beige Book. For more detailed information on the survey and its results, they can be accessed online.
In summary, the Federal Reserve staff has provided an update on the economy through the Beige Book, which indicates that businesses are struggling with inflation while customers are becoming more cautious with their spending due to economic uncertainty. The shortage of internship supervisors is also having an impact on college students and recent grads seeking work experience.
Furthermore, retailers are experiencing decreased profitability due to declining sales while automakers are reintroducing incentives as inventory piles up on dealer lots. Commercial real estate, especially office spaces, is also dragging down the economy.
Overall, it seems that despite some positive signs such as first-quarter GDP growth revision from 1.6% to 1.3%, there are still challenges that need to be addressed for a sustainable economic recovery.
