Summary of Economic Activity

The Tenth District economy grew at a moderate pace, but expectations for future growth softened somewhat due to rising costs, worsening supply chain disruptions and heightened uncertainty. Several contacts reported shifts in consumer spending. Demand for goods slowed while demand for services grew steadily, particularly in leisure and hospitality. Businesses also reported lower expected spending on more expensive discretionary items as prices continued to rise. Although expected growth softened generally, construction activity grew at a robust pace and backlogs for future projects extended further. Labor activity expanded moderately with solid job growth and increases in the average number of hours worked. Above average wage gains aimed at retaining workers were reported widely. Prices rose at a robust pace. Contacts in food manufacturing indicated that consumer prices for food are likely to increase further over coming months. Large retailers and grocers are reportedly accepting planned cost increases from food distributors that will be passed on to consumers through the summer and fall. Restaurant owners also indicated they are raising prices frequently, but with limited ability to fully offset rising costs.

Labor Markets

Job growth continued at a moderate pace, led by hiring in services sectors. Employment at leisure and hospitality businesses expanded to near pre-pandemic levels across the District. Hiring in manufacturing and other goods-producing sectors grew slightly, though contacts reported that labor demand and the number of jobs open in these sectors remains elevated. Employers noted that the average hours worked by employees each week grew moderately and is higher than pre-pandemic norms. The higher average number of hours worked was reportedly due to both strong labor demand conditions as well as fewer workers being employed on a part-time basis.

Most contacts reported solid wage growth. Businesses indicated that wage increases were being used more frequently to retain workers in recent weeks, as compared to previously offering bonuses, enhanced benefits or more flexible schedules to attract and retain workers. Moreover, the majority of contacts characterized the size of wage gains aimed at retention as larger than typical increases from recent years.


Prices rose at a robust pace. Recent increases in commodity prices are leading to price pressures for food that have not fully passed through to consumers. Large retailers and grocers are reportedly taking price increases from food manufacturers with 90-day lags, so that additional increases in consumer food prices are likely. Some restaurants reported taking advantage of digital menus to implement “real time pricing” on most items, but noted that customers have been unwilling to fully accept higher prices when dining out. Contacts at craft breweries noted that higher wheat costs may lead to losses as consumers substitute to lower cost options.

Consumer Spending

Consumer spending continued to grow at a moderate pace in recent weeks, but several contacts noted shifts in spending habits. Sales of food in grocery stores grew faster than at restaurants, but contacts were uncertain if this was due to labor shortages at restaurants continuing to restrict operating hours or because higher food prices led consumers to limit how often they frequent restaurants. Other contacts noted that spending on clothing and appliances declined slightly. Though demand for some goods softened, spending on leisure travel and other services continued to expand at a robust pace.

Manufacturing and Other Business Activity

Manufacturing production grew modestly and new orders for products continued to rise. Overall demand for trucking and transportation remained elevated, even as logistics businesses reported raising shipping rates in recent weeks. Transportation parts and services businesses faced ongoing difficulties sourcing needed parts, challenges that worsened following Russia’s invasion of Ukraine. Contacts indicated that lockdowns in China would increase input prices and worsen supply chain issues, leading some importers of consumer products to slightly reduce their orders for products to be delivered later in the year. Businesses indicated expectations that difficulties in procuring parts and materials will persist for the next 6-12 months, or longer. Facing ongoing labor shortages and raw material shortages, most manufacturing contacts indicated they expect production levels to remain at their current high levels over the next six months.

Several businesses reported slowing growth in their planned capital expenditures on equipment and less buildup in their inventories. Retailers highlighted shifting consumption patterns as a key reason they will undertake less inventory buildup over the summer. Prices for transportation vehicles and other production equipment on secondary markets increased rapidly over the past several months. Several contacts indicated that, although overall demand remains elevated, they see a heightened risk that demand could fall and cause their businesses to take losses on equipment purchases given their current high prices. These headwinds to business investment emerged recently alongside standing concerns about rising material costs and rising interest rates. On average, businesses in the District expected no changes in investment in inventory buildup over the next six months.

Real Estate and Construction

Non-residential construction activity expanded at a robust pace in recent months. Expectations for future growth in non-residential construction remained elevated as back-logs of orders were widespread and longer than seen in recent history. Contacts noted strong demand conditions are likely to maintain wage pressures over the medium term because companies are more willing to pay premiums to retain workers amid long backlogs. Also, several contacts noted their clients are more willing to accept price increases due to wage pressures than due to materials costs or overhead costs, leading some companies to be more likely to increase wages recently.

Community and Regional Banking

Loan demand remained stable over the past month, although customer appetite for residential mortgage loans weakened as interest rates increased. Contacts noted that commercial and industrial loan demand held steady, despite a reported increase in interest rates. Credit quality remained sound and problem loan levels were low amidst stable cash flow positions. Deposit growth moderated this month as customers pursued higher rates and utilized excess cash. Despite sound credit conditions, a moderate share of contacts’ outlooks for loan quality over the next 6 months deteriorated modestly due to inflation concerns and supply chain pressures on consumer and small business loan segments.


Tenth District energy activity expanded at a moderate pace in recent weeks. Active rig counts increased across District states in April and early May. Drilled-but-uncompleted wells declined across the Anadarko and Niobrara regions as additional wells came online. With more active rigs, regional oil production increased slightly over the past month, though new well productivity fell modestly. Oil prices are slightly higher from a month ago and drilling remains profitable for most District firms, despite rising costs. Natural gas prices continued to rise swiftly over the last month. District energy firms reported higher revenues in early 2022 along with higher materials and labor costs. Mining jobs, including the oil and gas sector, picked up across most District states in recent months, but continued to lag pre-pandemic levels. Expectations for future production, employment, and capital expenditures remained positive.


Agricultural commodity prices remained at multi-year highs, providing ongoing tailwinds to the Tenth District farm economy. Market conditions remained favorable for prices of all major commodities in the region and prices of wheat, corn, soybeans, cotton and cattle increased modestly from the previous month. Farm income and credit conditions also improved further during the most recent survey period. However, contacts expected conditions to soften slightly in the coming months and many cited concerns about rising input costs, broad inflationary pressures and severe drought. The western and southern portions of the region have been most exposed to drought, affecting wheat, hay and grazing conditions that could reduce profit opportunities for both crop and live-stock producers in those areas.