The Federal Reserve Bank of Chicago reports in its latest “Beige Book” that the economic conditions in the Seventh District, which includes Wisconsin and most of the upper Midwest, continue to improve, although the pace of growth has slowed.
The region includes Wisconsin, Iowa and parts of Illinois, Indiana and Michigan.
Consumer spending in the region moderated in June and early July. Retailers cited lower consumer confidence, a weaker customer response to promotions, and extreme summer heat as the main contributors to the lower sales pace.
Business spending continued at a steady pace. However, many contacts had become more cautious about future spending decisions, pointing to the heightened uncertainty surrounding the federal fiscal environment and the upcoming November elections.
Construction and real estate: Construction activity increased. Demand continued to be strong for multi-family construction, especially apartments, but also increased for single-family homes. Contacts also noted an increase in commercial construction projects.
Manufacturing production increased at a slower pace. The auto industry remained a source of strength, but activity softened in the steel and heavy equipment sectors. Exports to Canada and Mexico continued to increase, but exporters noted a decline in demand from Europe and China.
Credit conditions improved slightly on balance. Refinancing and lending for capital replacement expanded, but with little loan growth for other purposes.
Cost pressures weakened as energy prices were noticeably lower while other commodity prices also decreased. Wage pressures continued to be moderate.
Extreme heat and drought conditions spread across most of the district, stressing both crops and livestock. Corn and soybean prices moved sharply higher, and wheat prices also rose.
The Midwest Economy Index (MEI) decreased to +0.51 in May from +0.76 in April, but indicated that Midwest economic growth was above its historical trend for the seventh consecutive month.
