Beige Book Report: Slowing Economic Growth in the United States Amid Trade Challenges and Moderate Inflation
The Beige Book report released by the U.S. Federal Reserve indicated that economic activity saw a slight increase since mid-January.
Six districts experienced no change, four recorded modest to moderate growth, while two saw a slight contraction.
Topic
Key Points
Consumer spending declined overall, with strong demand for essential goods.
However, consumers became more price-sensitive regarding discretionary goods, especially among lower-income groups.
The hospitality and entertainment sectors were negatively affected by unstable weather conditions,
leading to reduced demand. Additionally, auto sales recorded a modest decline, reflecting weaker consumer spending.
In the manufacturing sector, most districts experienced slight to modest increases,
but manufacturers expressed concerns over potential changes in trade policies,
particularly in the petrochemical and office equipment industries.
Banking activity showed slight growth in some districts, with lending and financing levels remaining stable.
Real estate markets
showed mixed performance due to inventory constraints affecting housing availability.
Construction activity saw a modest decline in both residential and non-residential projects,
as developers were concerned about potential tariffs impacting lumber and building material costs.
The agricultural sector also experienced a slight downturn in some districts, negatively affecting productivity.
Employment increased slightly in four districts, remained stable in seven, and saw a slight decline in one.
The healthcare and finance sectors recorded employment growth,
while the manufacturing and information technology sectors saw declines. Labor availability improved in several sectors,
yet skilled labor shortages persisted in certain professions.
Wages grew at a modest to moderate pace, but the growth rate slowed compared to the previous report, indicating reduced wage pressures.
Prices rose moderately in most districts, with some areas experiencing faster increases,
particularly in manufacturing and construction, due to rising costs of food, insurance, and freight transportation.
Businesses faced difficulties in passing higher input costs onto customers,
though potential tariffs might prompt some companies to raise prices in advance.
As for economic outlooks in the coming months, expectations remained somewhat optimistic despite ongoing concerns
over the impact of trade policies and inflation on the U.S. economy.
Beige Book Report: Slowing Economic Growth in the United States