Fed’s Beige Book: U.S. Economy Stalls as Inflation and Tariffs Add Pressure
The U.S. economy showed little overall change, according to the Federal Reserve’s latest Beige Book report released on Wednesday. The survey found that consumer spending weakened, hiring slowed, and inflation pressures persisted amid rising tariffs and tighter immigration policies.
The Federal Reserve noted that three Districts reported slight to modest growth, five saw no change, and four experienced mild declines in economic activity. The report, prepared by the San Francisco Fed using data collected through October 6, suggests that economic momentum has largely stalled.
Consumer Spending and Labor Trends
Consumer spending slightly declined in recent weeks, particularly in retail goods, the Beige Book said. Some regions, however, reported increased demand for electric vehicles, driven by buyers rushing to benefit from the federal tax credit before it expires.
Employment levels were mostly stable, but overall labor demand remained muted. Many companies continued to reduce headcount through layoffs or attrition, citing weak demand and a shift toward automation and artificial intelligence investments.
Where hiring did occur, it reflected better worker availability, though employers preferred part-time or temporary workers over full-time staff. Labor shortages continued in hospitality, agriculture, construction, and manufacturing, particularly due to stricter immigration rules.
Persistent Inflation and Tariff Impact
On the inflation front, prices continued to rise, the Fed reported. Several Districts said input costs climbed faster, driven by higher import expenses and the rising cost of services such as insurance, healthcare, and technology.
The Beige Book also highlighted tariff-related cost increases, especially as U.S.-China trade tensions grew. Many regions reported higher input prices tied to tariffs, though the degree to which these costs reached consumers varied.
Overall, the report reflects a U.S. economy facing persistent inflation, slower spending, and labor market uncertainty — conditions that add pressure to both businesses and policymakers heading into year-end.
