(Washington, D.C.) A new survey by the Federal Reserve shows that U.S. economic activity has changed little in 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 Federal Reserve’s latest Beige Book, released Wednesday (November 26), showed that overall employment has slowed slightly recently, while prices have risen slightly.
The report stated, "The overall economic outlook remains largely unchanged, with some respondents mentioning an increased risk of economic activity slowing in the coming months, while others in the manufacturing sector remain optimistic."
Surveys in several regions, including New York, Atlanta, and Minneapolis, have found that while spending by middle- and high-income consumers remains resilient, low- and middle-income households have tightened their spending.
Regarding employment, the report points out that labor demand has slowed in about half of the regions, with the overall situation slightly down. "Although more companies are announcing layoffs, businesses in more regions are tightening their workforce by freezing hiring and letting employees leave, rather than laying off workers directly."
Regarding prices, businesses expressed continued concern about tariffs, particularly as input costs in the manufacturing and retail sectors have risen across the board. Many companies have experienced tariff-related profit margin reductions or financial strain, but some retailers reported that prices have decreased due to reduced demand, tariff suspensions, or tariff reductions.
The report stated, "Most of the surveyed businesses expect rising costs to continue, but they are divided on whether they plan to raise prices in the near future."
The Beige Book is a survey of economic activity in the 12 districts of the Federal Reserve, released two weeks before each interest rate policy meeting as one of the factors officials consider. This report observes economic activity up to November 17, a period that coincides with the federal government shutdown from October 1 to November 12. Some retailers say the shutdown negatively impacted consumer spending.
During the shutdown, much data was not collected and compiled in a timely manner. The next round of Federal Reserve policy meetings will be held on December 9 and 10. However, officials will not be able to obtain labor market and inflation data for October and November before then, which means that 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.