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State of the Economy: July 2022

Current Overall Economic Activity

Although economic activity has expanded at a modest pace since May, several Districts have reported rising indications of a slowdown in demand, with several Districts noting concerns over an increased risk of a recession. Reports from most Districts also revealed that consumer spending declined as heightened food and gas prices reduced households’ discretionary income. Low inventory levels continued to prevent a surge in new auto sales. Housing demand also weakened due to concerns about affordability resulting in a decline in sales which in turn caused modest growth in inventory and moderate cost appreciation. Some Districts saw a decrease in residential loan demand amid higher mortgage interest rates. Commercial real estate conditions continued to slow across all Districts. Despite healthy demand for energy products and an uptick in oil and gas drilling activity, supply chain bottlenecks and labor shortages continued to impact manufacturing activity. The hospitality and tourism industry reported a substantial amount of leisure travel activity, with some noting an upsurge in business and group travel. Non-financial services firms also experienced stable to slightly higher demand, and some firms reported that revenues exceeded expectations. 

Labor Markets

Most areas experienced a moderate rise in employment, with conditions remaining tight overall. Almost every District noted modest improvements in labor demand for workers, particularly among the manufacturing and construction sectors. Wage growth continued to see an uptick, with one-third of Districts revealing that employers were considering or had issued bonuses to offset inflation-related costs. Some economists believe wage growth will remain elevated for the next six months, while a few predict that wage pressures are expected to subside later this year.


Significant price increases were noted nationwide at all stages of consumption. Price increases in energy, food, and commodities continued to be historically elevated. Most sources expect pricing pressures to persist, at least through the end of the year.

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