June 2026 Beige Book Interview

Announcer: Welcome to this Beige Book episode of the St. Louis Fed’s Timely Topics podcast, where you get the latest on what we’re hearing from business and industry contacts in Arkansas and across the Eighth District. The information shared in this podcast is received from contacts outside the Federal Reserve System and is not a commentary on the views of Federal Reserve officials.

Matuschka Lindo Briggs: The Beige Book was released yesterday, and today we’re taking a moment to reflect on what it shared. Let’s dive into the latest observations, both from across the nation and right here in our own District.

I’m Matuschka Lindo Briggs, the Little Rock regional executive for the St. Louis Fed. Joining me today is Jeremy Hill from the Kansas City Fed and Chuck Gascon from the St. Louis Fed. How is everyone doing today?

Jeremy Hill: Hello, Matuschka and Chuck. I’m doing well and excited to be here.

Charles Gascon: I am doing great, Matuschka. First week of summer vacation for my kids, so, that’s kind of where my mind is today.

Lindo Briggs: All right. I completely can relate. This week’s national summary was put together by Jeremy and the team at the Kansas City Fed, which gives Jeremy a great vantage point on what people across the country are seeing and talking about. Jeremy, as you pulled everything together, share what stood out to you the most.

Hill: Well, there are a few items. The first one we should talk about are these elevated energy prices from the conflict in the Middle East. Was this the primary driver for inflationary pressures, and the spillover into other sectors like shipping and groceries? That has put additional financial strain on lower- and middle-income groups.

But that said, overall economic activity increased to a slight-to-moderate pace in most of the Federal Reserve districts. There are two exceptions: Philadelphia reported a slight decline, and San Francisco is flat.

Another big one to bring up is manufacturing across most of those districts. They’re talking about the growth from data centers and defense orders that have been increasing quite a bit and growing the economy.

There are a couple of interesting anecdotes. One is from Atlanta saying that because of both of those segments, they have a robust pipeline for the next three to five years. In Chicago, I made a comment saying that in equipment fleet rentals, sales have gone up quite a bit.

One more thing I want to share is consumer spending has been in a drag because they continue to elevate energy costs and inflation. [CW1.1]It’s been over the last couple of weeks that that has been weighing down most of these districts.

Lindo Briggs: In the Arkansas region, we are noticing that consumer activity remains steady, but people are increasingly sensitive to price changes. Chuck and I have been talking about contacts reporting that while shoppers are still making purchases, they are buying fewer items overall. Additionally, more families are opting for fast food over sit-down restaurants, and many are adjusting their daily routines, such as carpooling to school or work, to help stretch their budgets and reduce transportation costs.

Gascon: We also heard from some employers that they’re increasing flexibility around coming into the office and reducing hours. Some of it’s due to higher fuel prices, and some of it’s companies just moving to what they call summer hours.

But overall consumer spending hasn’t changed a whole lot since the last update. Most retailers around the District said their sales are steady or up a bit, although some people did mention that customers seemed less interested in those discretionary purchases.

Auto sales seem to continue to slow. The airports in Bentonville and St. Louis reported consistent traffic, but Memphis had mixed results, especially with low-cost carriers struggling.

A hotel operator here in the St. Louis area did note that their revenue is actually beating expectations, thanks to a strong convention center turnout, sports events and a busy concert calendar.

Jeremy, is there anything else you want to share on consumer spending on the national picture?

Hill: Yeah, there were two different kinds of consumers that were reported. One was this high-income consumer that was very resilient. And then you have the middle- and low-income.

When you get to the high-income consumer, Atlanta characterized one as unapologetic luxury, which is having that consistent demand. Another one is New York, talking about department stores having the affluent consumers, having lots of demand for accessories and especially for wristwatches. When you go to the middle- and low-income consumers, that discretionary spending—as you’re sharing—is really eroding quite a bit. There’s less demand for restaurants; the frequencies have gone down.

And then you see another factor that has come across a lot of the districts, which is credit card usage going up and increased applications to cover essential purchases.

Lindo Briggs: So, besides consumer spending, any other themes that stood out on the national picture, Jeremy?

Hill: I think it was pretty interesting to see and highlight what’s happening in the single-family side, which is becoming more softened.

Rhode Island had a good anecdote talking about how it had the lowest level of single-family home sales since 2010, and an Atlanta builder made a comment that even though they lowered prices, they couldn’t even give away a house!

If you take these anecdotes and reports and bring this together, what you’re really seeing is this low churn in the housing market, which is creating this inventory scarcity. And when you take that with rising mortgage rates and tightening financial conditions, it’s a softening demand for that single-family home.

Lindo Briggs: Really appreciate that breakdown. Now let’s bring it a little closer to home. Is there anything specific you’d like to share from the Kansas City district?

Hill: Yeah, there are two segments I think we should bring up. One is the farm economy, which remains split across the crop side and livestock side. The crop—which is corn, soybean and wheat—prices have all come up, but fuel and fertilizers have eroded some of that profit margin.

On the cattle side, it continues to support that cow-calf producer and is boosting income for the dairy and crop operators who are diversifying into the beef side.

On the manufacturing side, it is aerospace—aerospace defense, commercial and even some of these other satellites and drones—they’re all growing quite a bit in this district, putting a lot of pressure for firms to keep up with that demand, adding labor and needing some additional capital investments.

Lindo Briggs: We’re seeing a lot of parallels here in the Eighth District. Manufacturing has ticked up modestly since our last report, with steady gains in both new orders and production. In Arkansas specifically, the defense sector continues to grow, bringing more workers into the state.

So, let’s talk about jobs. Jeremy, what does the national picture on the labor market look like?

Hill: On the labor side, it’s been fairly steady, with one exception: Cleveland actually had more of a modest growth than the others. And when you look across the districts, there’s a common theme still of this low-hire and low-fire environment; that means low turnover, minimal layoffs, and hiring that’s mostly for replacement rather than for growth. Several districts noted increased demand for a couple of things: construction and manufacturing jobs, which are from the data center construction story that we talked about a minute ago.

When you go further, there’s an interesting part on professional services across the districts. They had a disagreement on the amount of increased demand—it’s increasing or decreasing. And a lot of the common themes were this big shift in the use of technology and operational efficiencies with the same professional occupations.

Gascon: Here in our District, Matuschka, employment hasn’t really changed a lot since our last report. Businesses have added a few jobs here and there. For example, an auto parts retailer said that their staffing has been relatively steady, but there is some hiring as they’ve opened some new store locations. And hospitals know that they’re hiring more than last year.

On the other hand, a food manufacturer in Arkansas and a warehouse operator in Kentucky both noted that they’re seeing weaker demand, and they need fewer workers.

Lindo Briggs: Let’s move to inflation. Jeremy, start us off.

Hill: Price growth remained moderate across the districts, similar to the last report. There is another component: nonlabor input costs are continuing to rise faster than what businesses can charge customers, contributing to broader concerns on the margin compression that’s going on. Energy and fuel costs remain elevated and were the primary driver for inflationary pressures. These energy prices have a cascading effect into higher freight and shipping costs, plus higher prices at the grocery store and fertilizers that we noted already. With consumer spending less robust, many companies have had several inflationary mitigation strategies to preserve consumer demand.

Lindo Briggs: Yeah, same themes here. An Arkansas banker warned that rising deposit costs are squeezing margins. A contact in southern Arkansas says limited housing inventory and high construction costs continue to create affordability and workforce housing challenges.

Chuck, anything to add?

Gascon: Prices have been rising pretty quickly since our last report, and companies are seeing higher costs in a lot of areas. And it’s not just from energy. Companies have been passing some of these costs onto their customers to varying degrees, and many expect to raise prices further in the months ahead; although firms have been taking different approaches. For example, a hospitality business—they’re actually scaling back some of their services rather than raising prices, because customers have become more sensitive to the prices that they’re charging.

Lindo Briggs: Okay, you two—I want “big picture.” What’s the overall outlook? Are contacts sounding optimistic? cautious? Or are you hearing a mix of both?

Hill: Business outlooks for the next six months were reported to have little change in anticipated growth from before, as elevated uncertainty and signs of consumer spending weighed on sentiment. When you look at services, it’s more mixed, as consumer-facing firms are noticing energy and prices putting pressure on budgets. On the manufacturing outlook, orders are increasing. However, uncertainty is leading to this reluctance to expand. So, we’re seeing this real tension—some resilience in the underlying economy, but a lot of caution.

Gascon: Here in the Eighth District in the St. Louis area, outlook is slightly deteriorated, with contacts citing ongoing uncertainty—as Jeremy mentioned—with some supply chain disruptions and then rising fuel costs.

Lindo Briggs: All right. That’s a great place to wrap. Jeremy and Chuck, thanks for all your insights and a great and thoughtful conversation.

For a deeper dive of what’s happening around the Eighth Federal Reserve District, you can visit the St. Louis Fed website at stlouisfed.org.

We will be back again with the next Beige Book release on July 15, followed by our podcast on July 16.

Thanks for listening.