WASHINGON–Even in the face of strong borrowing by consumers, a growing number of financial institutions and analysts are expecting inflation to further cool, according to the Federal Reserve’s newest Beige Book report.
In the latest Beige Book, which is published eight times annually and which reflects a compilation of economic reports from each of the Federal Reserve Bank’s 12 districts that are drawn from outside the Fed system, the central bank said some of those district banks have reported higher delinquencies on consumer credit lines.
"Despite areas of strong consumer spending, businesses are anticipating a slowdown. Similarly, wage growth is abating, and employers are sounding a more confident tone that cost pressures will ease,” said NAFCU VP-Research and Chief Economist Curt Long. “This provides further support to the growing chorus of voices expecting inflation to continue to drop. NAFCU expects that the Federal Reserve is finished hiking in this cycle."
The Findings
Among some of the findings in the newest Beige Book:
- As credit unions know and would-be homebuyers are even more keenly aware, the report noted the supply of single-family housing did not become more abundant this summer. “Nearly all Districts reported the inventory of homes for sale remained constrained,” the Beige Book notes, adding, “Accordingly, new construction activity picked up for single-family housing.”
- Even with new construction, higher financing costs due to the highest mortgage rates and decades and higher insurance premiums “increasingly challenged” the construction of affordable housing units.
- Auto sales expanded in many Fed districts, but not necessarily because consumers wanted more cars. Instead, the report said increased sales had more to do with better availability of inventory rather than increased consumer demand,” according to the Beige Book.
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