US Beige Book draws attention to strains felt by US bizs, households

US economic activity and employment mostly changed little or remained unchanged in recent weeks, while prices increased moderately or modestly, the Federal Reserve (Fed) said recently in its Beige Book.

Across Fed districts, contacts reported flat to declining consumer spending as wages were failing to keep up with rising prices for many households.

US economic activity and employment mostly changed little or were unchanged in recent weeks, while prices rose moderately or modestly, the Federal Reserve said.
Across districts, flat to falling consumer spending was noticed as wages were failing to keep up with rising prices for many households.
Even in districts where economic activity was reported to have expanded, businesses worried about a reversal.

“Contacts frequently cited economic uncertainty and tariffs as negative factors,” the document said. “Overall, sentiment was mixed among the (Fed) districts. Most firms either reported little to no change in optimism or expressed differing expectations about the direction of change from their contacts.”

Even in districts where economic activity was reported to have expanded, businesses worried about a reversal.

The retail sector offered deals and promotions to help price-sensitive consumers stretch their dollars, while manufacturing firms reported shifting to local supply chains where feasible and often using automation to cut costs.

The push to deploy artificial intelligence (AI) partly explains the surge of data centre construction—a rare strength in commercial real estate noted by the Philadelphia, Cleveland and Chicago districts. Atlanta and Kansas City reported that data centres had increased energy demand in their districts.

Overall, sentiment was mixed among the districts. Most firms either reported little to no change in optimism or expressed differing expectations about the direction of change from their contacts.

Seven districts noted that firms were hesitant to hire workers because of weaker demand or uncertainty. Moreover, contacts in two districts reported an increase in layoffs, while contacts in multiple districts reported reducing headcounts through attrition—encouraged, at times, by return-to-office policies and facilitated, at times, by greater automation, including new AI tools.

Most districts mentioned an increase in the number of people looking for jobs. However, half of the districts noted that contacts reported a reduction in the availability of immigrant labour, with New York, Richmond, St. Louis and San Francisco highlighting its impact on the construction industry.

Half of the districts described modest growth in wages, while most of the others reported moderate growth. Two districts noted little or no change in wages.

The Beige Book is published eight times per year. Each Fed bank gathers anecdotal information on current economic conditions in its district through reports from bank and branch directors and interviews with key business contacts, economists, market experts and other sources.

Fibre2Fashion News Desk (DS)