Delinquency rates up, credit card debt raises concern, latest Beige Book finds

Loan demand declined, credit standards tightened, and delinquency rates edged up at financial institutions in the second month of the year, according to the Federal Reserve’s district-by-district report of current economic conditions released Wednesday.

According to the Fed’s Beige Book, based on information collected via survey in the Fed’s 12 districts on or before Feb. 27 (following up on the first report of the year, issued Jan. 18), high inflation and higher interest rates continued to reduce consumers’ discretionary income and purchasing power. Some concern was expressed about rising credit card debt by respondents to the survey, the Fed reported.

Commercial real estate activity was steady, the report stated, with some growth in the industrial market but ongoing weakness in the office market. Regarding the housing market, the report found that while they remain restrained by exceptionally low inventory, “an unexpected uptick in activity beyond the seasonal norm was seen in some districts along the eastern seaboard.”

Auto sales were little changed, on balance, though inventory levels continued to improve, the Fed said.

On prices, the Beige Book said inflation remains widespread. However, it said, price increases moderated in many districts. Some noted that firms were finding it more difficult to pass on cost increases to their consumers, the Fed said.

“Home prices were generally flat or down slightly, while rents were reported to be steady or higher,” the report stated. “Still, home prices and rents remained high, contributing to ongoing concerns about housing affordability. Looking ahead, contacts expected price increases to continue to moderate over the year.”

Beige Book – March 8, 2023