According to HousingWire's latest reporting on Federal Reserve economic activity, most parts of the country are seeing modest growth. Ten of the twelve Fed districts reported slight to moderate increases in economic activity, while two showed no real change. The picture is pretty mixed though, with some areas doing better than others and pockets of real concern underneath the surface.
On the consumer side, people are definitely being more careful with their money. Overall spending grew only slightly, and I'm seeing that split personality in the data between folks trading up on high-end purchases and others pulling back because of prices. Auto sales have been particularly soft, held back by lower consumer confidence, expensive fuel, and the higher cost of financing a car these days. Tourism and airlines are doing better though, with strong demand even at higher airfares.
Manufacturing is picking up across most districts, especially where there's defense work and data center projects involved. Construction tells two different stories: residential construction is declining while nonresidential construction is actually growing, driven heavily by those data center investments. The job market is ticking upward slightly, with employment gains spread across several districts, though retail and hospitality are actually shedding workers. Wages are growing moderately overall, with the biggest raises going to skilled trades and technical workers in construction and manufacturing where they're in short supply.
On pricing, things are getting expensive. Prices increased moderately across most districts, and input costs in manufacturing and construction are particularly elevated because of energy, transportation, and raw materials like metals and petrochemicals. Some businesses facing those pressures can't pass the full cost to customers because people are being more price conscious. The overall outlook remains positive for the coming months, but people are uncertain because of energy prices, policy changes, and global tensions.
The San Francisco Fed reported little overall change in their region, with residential real estate actually declining somewhat while commercial real estate stayed steady. What I am seeing locally here in the Bay Area is that this cautious consumer behavior and the shift toward commercial projects, particularly data centers, are reshaping where opportunities are strongest right now for both buyers and sellers.
