January 2024 Beige Book Interview – Little Rock

Matuschka Lindo Briggs:  Thanks for joining us for our economic snapshot, where we discuss in eight minutes or less what's happening across the state as shared by businesses and industry contacts in the Little Rock zone of the Eighth District. The information we share in this podcast were received from contacts outside the Federal Reserve system and is not a commentary on the views of the Federal Reserve officials.

I'm Matuschka Lindo Briggs, the regional executive with associate economist Nathan Jefferson. Nathan, welcome back to you and to everyone and happy 2024.

Nathan Jefferson: Happy New Year to you, too. Happy to be back here.

Lindo Briggs: I know you're as excited as I am that we've decided to continue with this podcast, which we piloted, starting last year. We received great feedback from many of our listeners, and it's just another platform, in addition to the Beige Book, to tell the story of what we are hearing and gathering from the real economy, which is basically from everyone listening.

Nathan, can you remind listeners what we do with their anecdotal information and why it is so important for us to hear from Main Street?

Jefferson: Well, we gather the anecdotal information we receive here and then we share it with bank leadership. It gives us a really good, real time look at the economy that goes beyond what we can just get from the data. We share with bank leadership and the bank president. And then they take that to Washington, D.C., to FOMC meetings as they try to determine what the appropriate path of monetary policy is.

Lindo Briggs: Before we get into some of this economic information, let's remind everyone that in this podcast we are sharing the economic conditions reflected in the most recent Beige Book report, which came out yesterday, January 17th. You can find it on the St Louis Fed website under research. Nathan, let's name like three or four top key pain points that our contacts shared with us in 2023.

A few that come to mind for me are interest rates on mortgages, car loans and credit cards. Also, financial institutions were watching deposits go down. I talked to a few of them even this week. That's still something they're looking at. Margins are tightening. What are some top ones that come to mind to you real quick? Just name off from 2023.

Jefferson: Well, a couple of things that were at the forefront of everyone's mind. First, contacts taught us a lot about the tight labor market that was really, really difficult to hire, particularly hiring kind of entry level positions. Then moving to consumer spending. We heard that there was a big shift in consumer spending from consumers moving to kind of more value options.

And then people were wondering whether that consumer spending would hold up even as the pace of price pressures due to the ongoing inflation, particularly through the first half of the year. So, I mean, those were some of the things that were really, you know, persistent in everyone's mind. And we heard throughout the entirety of 2023.

Lindo Briggs: All right, let's flip it. Let's look at 2024. We've talked about it, it's the beginning of the year. - we don't get a lot of information that's come in over the holidays. So, what have we heard maybe already from contacts or what are we are we looking to hear something that I think about are mortgage loan volumes, they have declined. And days on the market for homes continues to increase and home sales are down throughout the entire state. And that does include northwest Arkansas. What else are you hearing?

Jefferson: Well, I'm hearing that in terms of workers, the labor market is easing a little bit, but it's still a real challenge to find both skilled and unskilled workers. So, we heard from a daycare, for example, that said that they were offering free daycare to the children of workers in order to try to help find and retain some workers.

And then if you look at more skilled professional workers, it's still a real struggle to find these people, pretty much across all of Arkansas.

Lindo Briggs: Yes and I actually did tour and visit a manufacturer recently and they said while they are willing to upskill workers, they still need a better supply coming in and a better choice for hiring coming in. So, I'm following with you on there. Something that we saw was supply chain overall had gotten better last year, but not with specialty items.

So, wondering if 2024 will see some relief there. And finally, I'm really excited to see if consumer behavior is going to change, even more. Have you heard anything as far as tourism or in real estate or anything like that in general?

Jefferson: Yeah, sure. So, we heard that over the holiday season that there was a really strong leisure travel season, as measured by airport passenger numbers. We heard that domestic travel people are flying, people are spending. And there's real optimism that regional airport can surpass that 2019 numbers because that leisure travel it's just been a really strong segment so far.

Lindo Briggs: Well, I'll be interested into finding out more on tourism, especially as we get closer to spring break, we were just talking about that before we came on. So, what do we have coming up? We're going to have surveys coming up throughout the year?

Jefferson: We will have a quarterly survey that will be going on in February, we will be holding a number of other regional roundtable events in order to get people's anecdotal information on what's happening across our entire economy.

Lindo Briggs: And really, when I talked to several businesses overall, they are cautiously optimistic for 2024. Are you getting the same vibe?

Jefferson: Yeah, I mean, I'm hearing this about the same things. We talked about everything that they were going through in 2023. I'd say there's a real sense of the sense of optimism that maybe they've gotten through the worst of that and that they'll see some real growth in 2024.

Lindo Briggs: All right, Nathan, thank you so much. I'm looking forward to the year and working with you.

Jefferson: So am I.

Lindo Briggs: Again, it's helpful for all of us to hear what is happening on Main Street in our footprint. For a full summary of what is happening in the eighth Federal Reserve District, visit the St. Louis Fed's website at Saint Louis Fed dot org.

The next Beige Book release will be March 6th, followed by our podcast, March 7th. We look forward to visiting your communities and hearing your stories in 2024.