Beige Book: Consumer spending shifts away from discretionary goods

Economic activity was largely unchanged since early July, with five districts reporting slight to modest growth in activity and five others reporting slight to modest softening, according to the Federal Reserve’s sixth Beige Book release of the year. Most districts reported steady consumer spending as households continued to trade down and shift spending away from discretionary goods and toward food and other essential items.

Residential real estate conditions weakened noticeably as home sales fell in all 12 districts and residential construction remained constrained by input shortages, according to the Fed. Commercial real estate activity softened, particularly demand for office space. Loan demand was mixed; while financial institutions reported generally strong demand for credit cards and commercial and industrial loans, residential loan demand was weak amid elevated mortgage interest rates.