(Washington, D.C.) A recent survey by the Federal Reserve shows that U.S. economic activity has remained largely unchanged over the past few weeks, with the job market slowing in nearly half of the regions and overall consumer spending declining further, except for middle- and high-income consumers.
The Fed's latest Beige Book, released Wednesday (November 26), shows that overall employment has slowed slightly recently, while prices have risen slightly.
The report states, "The overall economic outlook remains largely unchanged. Some respondents cited increased risks of a slowdown in economic activity in the coming months, while some manufacturers remained optimistic."
Surveys in some regions, including New York, Atlanta, and Minneapolis, found that while spending by middle- and high-income consumers remained resilient, low- and middle-income households tightened their spending.
Regarding employment, the report notes that labor demand slowed in about half of the regions, with the overall situation slightly worsening. "While more businesses announced layoffs, more regions tightened their workforce by freezing hiring and allowing employees to leave, rather than laying off workers outright."
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Regarding prices, businesses indicated that tariffs remain a concern, particularly as input costs in the manufacturing and retail sectors have risen broadly. Many companies have experienced tariff-related profit margin reductions or financial strain, while others reported price decreases due to declining demand, tariff suspensions, or reductions.
The report stated, "Most surveyed businesses expect cost pressures to persist, but there is disagreement about whether they plan to raise prices in the near future."
The Beige Book, compiled by the Federal Reserve Banks of the 12 districts, surveys economic activity in their respective regions and is released two weeks before each round of interest rate policy meetings, serving as one of the references for officials. This round of reports observes economic activity up to November 17, coinciding with the federal government shutdown from October 1 to November 12. Some retailers said the shutdown negatively impacted consumption.
During the shutdown, much data was not collected and compiled in a timely manner. The next Federal Reserve policy meeting will be held on December 9 and 10, but officials will not have access to October and November labor market and inflation data until then, meaning the Beige Book may be more valuable than usual.
With officials like New York Fed President Williams, who share similar views with Fed Chairman Powell, recently stating that there is room for interest rate cuts, the market currently predicts an 85% probability of a 0.25 percentage point rate cut in December.
