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January 2024

Eighth District Beige Book

Summary of Economic Activity

Economic activity has remained unchanged since our previous report. Labor markets remained tight, but contacts reported reduced urgency to hire new workers and stable wage pressures. Prices increased, but the rate of price increases for many firms has slowed over the past few months. Travel and hospitality firms reported strong leisure travel growth during the holiday season and an optimistic outlook for the upcoming year. Rental prices were flat and residential inventory rose slightly. Banking contacts reported slowing loan demand. Agriculture contacts were negatively affected by drought conditions.

Labor Markets

Employment levels have remained unchanged since our previous report. Though labor markets remain tight, reports of easing increased. An Arkansas contact reported weakening of employment conditions across the state, and noted that, while the urgency to hire has slowed, more firms are using internships and apprenticeship programs to upskill workers. Construction sources in St. Louis reported an increase in jobs due to an influx of new projects.

Wages have continued to grow slightly since our previous report. A daycare contact in Northwest Arkansas reported rising wages in competing sectors have led to challenges retaining workers. A logistics contact in Louisville reported wages were up about 4% year-over-year, while a restaurant contact in Little Rock reported wages rising 5-7% across the industry.


Prices have continued to increase modestly since our previous report. Multiple contacts noted that costs have been rising at a slower rate than they were a year ago, and contacts' ability to pass costs to consumers varied. A daycare contact reported a 10% increase in weekly prices charged due to increases in the cost of supplies and utility rates. Some businesses are choosing not to raise prices even though labor and nonlabor input costs continue to increase. A hotel contact reported tighter profit margins due to increased operating costs. Contacts report that prices of some items, like used cars and event ticket prices, decreased.

Consumer Spending

District general retail, restaurant, automotive, and hospitality contacts generally reported mixed business activity. To take advantage of the growing popularity of resale and thrifting, a St. Louis retail contact has promoted special seasonal items, participated in pop-up events, and increased marketing efforts to help spur more consumer spending. An Arkansas brewery stated that while the volume of beer sold rose over the previous year, their profits fell. A District auto contact stated that they've seen losses over the fourth quarter due to slower consumer spending. A Little Rock hospitality contact noted that while travel numbers are improving, group business travel does not seem to be making a post-COVID return. A St. Louis airport contact reported strong leisure travel demand during the holiday season and projected a return to 2019 passenger numbers in early 2024.


Manufacturing activity has slightly decreased since our previous report. Firms in both Arkansas and Missouri reported modest decreases in new orders and inventories. There were slight increases in production and delivery lead times in both states. Finding and retaining workers remains an ongoing issue for manufacturing contacts. On average, firms reported they expect slight increases in production and delivery lead times in the coming quarter.

Nonfinancial Services

Activity in the nonfinancial services sector has improved slightly since our previous report. Freight traffic increased slightly, and signals in the transportation sector were generally positive. An Arkansas airport contact reported strong enplanement numbers, exceeding the previous 2019 heights. St. Louis public transportation reported high demand, and nearby St. Clair County (Illinois) began construction on connecting two regional commercial airports by light rail. Several industries experienced labor issues. Memphis air traffic mechanics took steps to unionize, citing "eroding" pay and pensions, while St. Louis nurses went on strike, demanding better pay and safety.

Real Estate and Construction

Residential real estate rental rates have remained unchanged or dropped slightly in the four major District metro areas since our previous report. Inventory for residential real estate in the Memphis, Louisville, and Little Rock metro area was up 9% on average since the previous year. Year-over-year total homes sold and median sale prices declined in the Memphis and Little Rock metros. In the Louisville metro area, year-over-year total homes sold have increased 1%, and the median sale price has increased 6%. Commercial real estate rental markets continue to be stagnant in the office sector for downtown areas. Contacts reported continued commercial real estate sales in Northwest Arkansas, including two large multi-family units and a couple of retail sales. A large multi-family community is expected to start construction in Northwest Arkansas in early 2024.

Banking and Finance

Loan growth has slowed to a modest pace since our previous report, but banking conditions and lending activity have remained healthy. However, commercial and industrial loan growth decreased slightly despite the increase in overall loan volume, and demand for loans continues to be lower than a year prior. There has been an ongoing modest decline in real estate loan growth. Mortgage banker contacts had an optimistic outlook and expected an increase in activity from buyers who have been waiting for interest rates to fall. Total deposit growth increased modestly in the District and was faster than the national rate.

Agriculture and Natural Resources

Agriculture conditions have worsened slightly since our previous report, as ongoing droughts continue to effect crop and livestock conditions. Of the District states reporting data through the end of December, the percent of winter wheat rated as fair or better was down only 2% relative to last year. Total wheat acreage in 2023 expanded significantly compared with 2022, returning to 2021 levels. Conditions in Tennessee, where drought is the most extreme, declined more dramatically; the percent of Tennessee winter wheat rated fair or better fell 22 percentage points during the reporting period, ending at just 76%. While drought conditions improved slightly in Tennessee over the reporting period, the extent of moderate to severe drought increased throughout the northern areas of the District at the same time. Cotton and cattle farmers reported feeling the effects; some reported that they had to ship their cattle to other states as a result. In Arkansas, an energy firm announced plans to mine and produce lithium for electric vehicle battery production.

Highlights by Zone

The Beige Book report provides an overview of economic conditions in the Eighth District based on information received from business contacts. Because aggregating zone data to the District level sometimes masks variations in conditions within the District, the summaries below are by zone: The headquarters office is in St. Louis and the branch offices are in Little Rock, Louisville, and Memphis.


Little Rock Zone

Economic conditions in the Little Rock zone have remained unchanged since our previous report.

A brewery reported that consumer alcohol consumption trends shifted slightly over the second half of 2023: Consumers chose lower-cost products and drinking during the week declined from pandemic-era highs.

A restaurant reported stable operating expenses and decreasing food costs over the last half of 2023.

A daycare operator reported offering free enrollment of staff children and annual bonuses to increase employee retention.

Louisville Zone

Economic conditions in the Louisville zone have remained unchanged since our previous report.

A commercial real estate contact noted that industrial development plans have picked up over the past months and credited it to less uncertainty about the path of interest rates.

Retail contacts reported strong sales during the holiday season and a positive outlook.

A commercial construction contact reported strong growth in 2023. They noted that, historically, public contracts have made up the majority of their business; but, in 2023, 60% of their business was private contracts.

A pharmaceutical distributor reported that prices for generic drugs have fallen in recent months, which has led to profits remaining unchanged even as sales volumes have risen. 

Memphis Zone

Economic conditions in the Memphis zone have remained unchanged since our previous report.

A banking contact reported that deposit costs remain high but have begun to cool down slightly.

A food processing contact reported that low-wage turnover has fallen and raw materials costs have moderated. 

An agriculture contact reported that prices for corn, soybeans, and cotton decreased about 5% over the last quarter of the year. This has led to concerns among farmers that selling prices are falling faster than production costs.

A Memphis-area community college reported that enrollment increased for the first time since the pandemic.

St. Louis Zone

Economic conditions in the St. Louis zone have remained unchanged since our previous report.

Commercial real estate contacts reported that while major tenants renewed their downtown St. Louis leases, several did so for smaller amounts of space. 

Real estate contacts reported that single-family inventory was up 7% year-over-year in December, and median sales prices were down 4%.