WASHINGTON– The Federal Reserve’s Beige Book released this week paints a muted economic landscape with many regions reporting little to no growth amid persistent cost pressures and cautious consumer behavior.
Most of the 12 Fed districts indicated that economic activity was flat or only modestly higher, with four districts noting modest gains. Business sentiment remains subdued amid tariff uncertainty, especially affecting manufacturing, trade, and hiring decisions, according to Investopedia and the Federal Reserve.
The Findings
The Beige Book indicates:
- Consumer spending was broadly soft. Retailers and restaurateurs cited ordinary patterns, while rising prices—driven by tariffs and higher insurance and utility costs—stretched household budgets. Businesses increasingly turned to discounts and promotions, while consumers opted for staycations and cut back on non-essentials.
- Employment remained largely stable, though some districts saw slight declines. Wage growth persisted at a modest pace. Firms were hesitant to adjust staffing, relying on automation or conservative hiring, especially amid labor uncertainty and reduced immigrant labor availability, according to the Federal Reserve and Reuters.
- Price pressures are mounting. Input costs continue to rise, and while some firms passed these on to customers, others hesitated due to competitive pressures. Most districts expect additional pricing pressure in the months ahead, the Fed said.
Regional Highlights
- The Boston district reported slightly expanding activity overall, while consumer spending remained flat and tariff-related uncertainty loomed.
- The New York district reported a slight downturn in activity; selling prices rose moderately, and input costs climbed sharply.
- In the Cleveland district, business activity inched upward, though consumer and manufacturer demand stayed flat amid affordability and trade policy concerns, according to the Cleveland Fed.
The Federal Reserve will meet later this month to consider the future direction of rates.
