What Does the Federal Reserve’s “Beige Book” Reveal About the State of the U.S. Economy in the Coming Period?
Economic growth is starting to slow down in more sectors, and the growth outlook for the next six months is expected to face uncertainty due to upcoming elections, geopolitical conflict, and inflation, according to the Beige Book released by the Federal Reserve on Wednesday.
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The Federal Reserve said in its economic report, the “Beige Book,” which is based on narrative information gathered by 12 Federal Reserve Banks up until July 8:
“The outlook for the economy suggests a slowdown in growth over the next six months due to uncertainty regarding the upcoming elections, domestic policy, geopolitical conflict, and inflation.”
The report added that the weaker outlook comes as most sectors in this report indicated a modest growth pace, but five of them pointed to “stable or declining activity—up from three banks compared to the previous reporting period.”
In a sign of further cooling in the labor market, the report noted that several sectors saw some improvement in labor supply conditions with a decrease in labor turnover, reducing the demand for finding new workers.
The report added
“Looking ahead, contacts in many sectors expect to be more selective in who they hire and not fill all vacant positions.”
The labor market has become a growing focus in recent weeks after Federal Reserve Chairman Jerome Powell indicated a slight shift in the central bank’s focus towards easing in the labor market instead of focusing solely on inflation.
Meanwhile, the pace of inflation was modest, as the Beige Book showed that “most sectors indicated that input costs have begun to stabilize.”
What Does the Federal Reserve’s “Beige Book”