ST. LOUIS — The economic outlook for the rest of 2022 has weakened because of concerns about continued price increases and softening demand, according to a Federal Reserve Bank report released Wednesday.
The report includes information on the multi-state Federal Reserve district that covers the St. Louis metro area, along with eastern Missouri, Arkansas and parts of Illinois, Indiana, Kentucky, Mississippi and Tennessee.
“Competition for workers continued to place upward pressure on wages. Prices for raw materials and fuel increased at a robust pace; firms passed on prices to consumers and adjusted behavior to try to mitigate the impact of price volatility,” the report said.
Also, the residential real estate market has seen demand begin to cool now that interest rates are increasing.
"However, with inventory still low, it remains a seller's market. One contact reported that many prospective homeowners are favoring new builds despite elevated input costs, because they can buy the house at asking price without competing against other buyers," the report said.
The report, which is published eight times a year, provides a snapshot of economic conditions. Each of the 12 Federal Reserve districts gathers information through reports as well as interviews and online questionnaires filled out by businesses, community organizations, economists and market experts.
"Sales and orders reports from regional businesses are very solid, but there is a clear sense that the outlook for the economy has weakened due to higher inflation and overall uncertainty. A backlog of projects could provide a buffer to slowing demand," Chuck Gascon, a senior economist with the Federal Reserve Bank of St. Louis, told the Business Journal.
Contacts in three of those districts — Boston, Philadelphia and Dallas — expressed concern about a recession.
Read the full breakdown from the "Beige Book" findings on the St. Louis Business Journal website.