The Beige Book Report, published by the Fed, gave an important signal on the economic outlook around the country.
The report found that prices rose modestly in most regions, but employment levels generally remained stable. Business trusts differed between regions.
Ten of the Fed’s 12 districts described price increases as “moderate” or “medium”, while two districts reported that input costs exceeded the sales price rise.
It is reported that input prices have risen in particular due to tariffs. Price increases also reportedly continue in insurance, energy and technology services. Some companies pass these costs to consumers, but most regions show a tendency to limit price increases.
The Cleveland and Minneapolis regions noted that despite rising costs, competitive pressures have forced companies to lower prices. Prices are expected to continue to rise in the coming months, but three regions noted that this increase could accelerate.
On the employment front, 11 regions reported “generally stable” or “small changes,” while one region showed a slight decline. It was noted that companies are cautious about employment because of weak demand and economic uncertainty, whilst layoffs and natural staff cuts have increased in some regions. The use of artificial intelligence and automation technologies is also accelerating the trend towards reducing staff. Meanwhile, the decline in the supply of migrant workers has been noted that it is particularly problematic in the construction sector. However, wages continued to rise moderately in most areas.
The New York Federal Reserve reported that consumers are under pressure due to rising costs of insurance, energy and other living. The retail and hospitality sectors sought to offset weaker consumer sentiment with discount campaigns, but not offsetting the decline in international tourism demand. Car sales remained flat, but demand for spare parts and repairs increased. The manufacturing industry has been particularly prominent in the transition to local supply chains and automation to reduce costs.
The Federal Reserve Boards in Philadelphia, Cleveland and Chicago noted that the rise in artificial intelligence applications has led to a significant increase in data center construction. Data centers were reported to be increasing energy demand in Atlanta and Kansas City. Overall, business trusts vary across regions, and many companies are reportedly uncertain about their economic outlook.
*This is not investment advice.
