Economic outlook deteriorates in Mountain West amid trade war

Axios

25-04-2025

Overall sentiment about economic outlook in the Mountain West worsened in February and March as President Trump launched the nation into a trade war, according to the Federal Reserve's latest Beige Book report.
Why it matters: It's not likely to change anytime soon and could spell long-term woes for a region struggling with severe housing and affordability crises.
Context: The Fed publishes the Beige Book eight times a year to give a snapshot of current economic conditions across its 12 districts, providing indicators for what to expect in coming months.
The report is compiled by gathering information from businesses, community organizations and other sources across each district.
State of play: The Federal Reserve Bank of San Francisco oversees nine western states and three U.S. territories, including California.
Economic activity in the area slowed slightly during the mid-February through March reporting period, the Beige Book found.
Employment fell somewhat as businesses across multiple industries, including Big Tech, reported recent and planned layoffs. All the while, wages ticked up.
Prices overall "rose modestly" at a slightly faster pace than in the previous report. The region also saw higher price pressure for imported goods and raw materials, including aluminum, steel, electrical components and apparel.
Between the lines: Demand for retail and other consumer services weakened, with households and firms more cautious with spending amid anticipated downturn in labor market conditions.
The cost of services like insurance, health care and utilities stayed elevated even as some leisure and hospitality businesses lowered their prices to attract customers amid softening demand.
Many businesses also reported price increase notices from suppliers due to recently implemented and anticipated increases in tariff rates.
What they're saying:"Contacts generally expected inflationary pressures to intensify over the coming months," the Beige Book states.
"Most contacts reported that they plan to pass increased input costs on to customers, but some expected to absorb cost increases to preserve market share."
Threat level: Despite continued demand, activity in real estate remained slow.
Plans for construction of new commercial and residential properties were at times held back as developers faced higher costs for construction materials and elevated financing costs.
"Some landlords reported an increase in rent payment issues as tenants struggled with rising costs," the report notes.
That will likely pose a challenge to San Francisco as it looks to boost its housing production and office building use.
What to watch: Demand for community support services like housing and food assistance remained high even as service providers struggled with "deteriorating conditions."
Funding from public and private sector sources dropped due to federal policy changes and companies' reduction in discretionary and philanthropic spending.
Some nonprofits had to cut programs and lay off workers as a result. That means local governments might have to shoulder a larger financial burden — something San Francisco will struggle with as it faces its massive budget deficit.