US economic activity ebbs, prices rise in Fed's Beige Book
[NEW YORK] Economic activity declined slightly in the US in recent weeks, indicating tariffs and elevated uncertainty are rippling across the economy, the Federal Reserve said in its Beige Book survey of regional business contacts.
'All districts reported elevated levels of economic and policy uncertainty, which have led to hesitancy and a cautious approach to business and household decisions,' according to the report published on Wednesday (Jun 4).
Prices increased at a 'moderate' pace in the US, the report said. Moreover, 'there were widespread reports of contacts expecting costs and prices to rise at a faster rate going forward'. A few regions expected these increases to be 'strong, significant, or substantial'.
The report noted that firms with plans to pass along tariff-related costs to consumers expect to do so within three months.
US President Donald Trump has imposed levies on many US imports and threatened even higher tariffs on key US trade partners. This week, he doubled tariffs on steel and aluminium. The ultimate shape and scale of tariffs remains highly uncertain.
Mentions of tariffs came up 122 times in the Beige Book, compared with 107 in the prior report. Variations of the word 'uncertain' appeared 80 times.
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The Federal Reserve Bank of St Louis compiled the latest edition of the Beige Book using information gathered on or before May 23. The report includes commentary and anecdotes from business leaders and other contacts in each of the Fed's 12 regional districts. Fed officials next meet Jun 17 to 18.
Most regions described employment as 'flat', and there were widespread comments about uncertainty delaying hiring. All districts noted weaker demand for labour. Wages continued to grow at a 'modest' pace.
The report said the outlook remains 'slightly pessimistic and uncertain,' similar to the previous Beige Book.
District highlights
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