Economic activity increased in recent weeks even as agricultural conditions were lackluster, according to the Federal Reserve Beige Book. .Ag conditions were weak in the Minneapolis region even as corn and soybeans were in strong shape across the district. Drier conditions were evident in the western part of the region, and wheat conditions worsened. Prospects for farm income this year were unchanged in the Chicago region. Corn and soybean crops were off to strong starts in most of the Chicago region, despite progress falling behind in much of the southern part due to late planting. Costs for ag services were higher, leading contacts to use less pesticides and fertilizer when growing. Ag conditions remained strained in the St. Louis region as Arkansas farmers worried poor crop conditions would limit yields, making it harder to generate a profit with low commodity prices. “Some farmers reported reducing fertilizer usage due to tight budgets and others are still trying to find additional financing to make it to harvest,” according to the Beige Book. “An accountant reported reducing billing rates for all their farmers this season due to concerns about their financial stability.” Row crop prices remained low in the Kansas City region, limiting profit opportunities for most producers, according to the report. Farm loan repayment challenges increased, with deteriorating conditions especially in areas heavily concentrated in crop production. Strong cattle prices continued to support farm finances. Loan volume increased in most districts as construction activity slowed. Commercial real estate demand was unchanged in the Chicago region along with vacancy rates, prices and rents. Reduced occupancy rates in the industrial and multifamily sectors were balanced by higher occupancy rates in the office and retail sectors. Bankers across the St. Louis region reported improved earnings performance in the second quarter amid lower funding costs. “While credit conditions remain strong, loan growth has been modest, with banks noticing a decrease in loan demand,” according to the report. Financial conditions eased in recent weeks in the Chicago region as bond and equity values increased while volatility decreased. Business loan quality decreased in the Chicago region, with one contact experiencing weakening in the small business space. “Business loan rates edged down, and terms tightened slightly,” according to the report. “Demand for consumer loans remained flat, though one contact noted a decrease in demand for auto and home insurance. Consumer loan quality, rates and terms remained flat.” Loan quality in recent weeks was stable for most banks in the Kansas City region, despite several noting deterioration. Expectations are for loan quality to deteriorate over the next six months due to consumer lending challenges. Overall employment increased even as businesses were cautious in hiring amid economic and policy uncertainty. Labor availability improved for employers, with reductions in turnover rates and more job applications. Prices increased across districts amid tariff-related pressure, especially for raw materials used in construction and manufacturing. President Donald Trump has taken an aggressive approach to tariffs during his second term in office, announcing 30 percent tariffs on goods from Mexico and the European Union. He’s also threatened to impose tariffs on pharmaceutical products and semiconductors as soon as August. Many companies passed on a part of cost increases to consumers through price hikes or surcharges, according to the report. Some manufacturing contacts experienced challenges finding skilled workers in the Chicago region, according to the report. Several other regional manufacturers were only hiring for replacements, had called off plans to hire due to low demand, or instituted layoffs. Some firms reported that Trump’s push to deport more undocumented migrants was having an impact on attracting employees. Labor availability was much higher in the Kansas City region, lowering wage pressures for the rest of the year, according to the report. Most contacts in the St. Louis region continued anticipating higher nonlabor costs in the coming months due to tariffs. “The outlook among contacts remains highly uncertain and slightly pessimistic,” according to the report.