Federal Reserve Banks across the country collect anecdotes from contacts and hone in on concerns for Federal Reserve Beige Book summaries, published eight times each year. Historically, insights about conditions affecting low- and moderate-income communities have come from the perspective of businesses. In September 2022, several Reserve Banks began including “Community Conditions” and “Community Perspectives” sections. These sections provide insight into local changes through direct accounts of nonprofit and community leaders and workforce professionals serving lower-income people. Here are some takeaways from the May 2023 Beige Book, which was prepared at the Federal Reserve Bank of Chicago and based on information collected on or before May 22, 2023.
Please note that the Beige Book summarizes comments received from contacts outside the Federal Reserve and is not a commentary on the views of Federal Reserve officials.
“Community leaders reported that heavy congestion and long commute times make transportation difficult for many people, particularly those living in the New York City area. Employers noted that transportation is especially challenging for lower-wage workers, who often face extended travel times. Though hybrid working arrangements have reduced the number of workers commuting to city centers in the region, there has been an influx of younger remote workers residing in these areas to take advantage of urban amenities and conveniences.”
– New York Fed, Federal Reserve 2nd District, Community Perspectives
“Nonprofit contacts indicated that housing affordability remained a challenge and had recently worsened for low- and moderate-income households. Contacts cited rising housing costs, low inventory, and purchases by institutional investors as factors contributing to the affordability issue. A community stakeholder reported that two outside investors purchased more than 500 units of affordable housing in one community, and the residents, all of whom were low-income tenants, were asked to vacate the property with minimal notice. Another contact reported that all-cash transactions limited access to first-time homebuyers, particularly those looking to purchase homes in lower-priced markets. To help counter these trends, one public agency acquired more than 190 properties from a private investment company and was recently working with renters to keep the units as affordable housing.”
– Cleveland Fed, Federal Reserve 4th District, Community Conditions
“Workforce training providers and banking contacts who serve low- and moderate-income individuals continued to see signs of declining household financial conditions. Regional bankers observed that consumer financial stress had intensified from a period of higher savings as delinquencies returned to pre-pandemic levels. While some employers noted slightly lower staff turnover, workforce development contacts affirmed that workers continued to leave jobs in search of higher wages to offset rising expenses, especially housing. Others said workers continued to report a need to work from home to cope with household demands. Some owners of small businesses who previously relied on traditional banks for loans, faced credit constraints, leading them to turn to Community Development Financial Institutions for financing.”
– Atlanta Fed, Federal Reserve 6th District, Community Conditions
“Community development organizations and public administrators reported a small increase in overall economic activity in April and early May. State government officials said tax revenue continued to grow but at a slower pace. Unemployment insurance claims remained low, though one contact noted a rise in claims from workers at temporary help firms. Demand for social services was elevated; contacts said that the need for food assistance had been exacerbated by the recent end of Covid-19 benefits. Tight labor market conditions were again a challenge for small businesses and community-serving organizations, as employees were reportedly willing to change jobs for modest increases in pay and were less swayed by benefit options. Elevated interest rates continued to be a factor limiting the supply of affordable housing.”
– Chicago Fed, Federal Reserve 7th District, Community Conditions
“Organizations serving low-to-moderate income (LMI) communities reported increased demand for their services compared to six months ago. The growth in demand was noted across food assistance, housing assistance, and care economy segments of the non-profit space. As consumer prices have increased, organizations noted clients were more likely to be experiencing depleted savings and high credit card utilization, suggesting LMI populations are struggling to accommodate the recent growth in the costs of living. Non-profit leaders indicated they anticipate adverse effects of tightening credit availability on the communities they serve over coming months.”
– Kansas City Fed, Federal Reserve 10th District, Community Conditions
“Nonprofits continued to see increased demand for their services. Food insecurity remains a rising concern for lower-income families, and some nonprofits report record use of their food pantries. Contacts pointed to inflation and the cessation of pandemic-era expanded SNAP benefits in March. Housing affordability was also a primary concern, and one contact said low housing inventory has made their provision of housing vouchers difficult. The nonprofit has sufficient funding for the vouchers but cannot find enough landlords willing to accept them, often because they believe they can get a higher rent from other perspective tenants. Multiple contacts mentioned consequences of the digital divide—a struggle with digital literacy and access to technology is a barrier to employment for lower-income individuals, as well as a barrier to credit access given the decline in brick-and-mortar banks.”
– Dallas Fed, Federal Reserve 11th District, Community Perspectives
“Conditions in the community support and services sector were mixed. Some contacts mentioned increased availability of resources for addressing homelessness issues in areas of the Pacific Northwest, as well as assistance from philanthropic foundations and online fundraising in Nevada and California. Nonetheless, reports also highlighted the challenges in meeting the demand for housing services and accessing funds for small businesses. In addition, contacts reported difficulties hiring specialized professionals, which have contributed to staff burnout and turnover at institutions including those supporting children’s health, education and training, and local journalism.”
– San Francisco Fed, Federal Reserve 12th District, Community Conditions
Visit the May 2023 Beige Book report for a full national summary and more information about economic conditions from each Reserve Bank, including labor markets, financial services, real estate, and more.
