The Federal Reserve’s latest Beige Book report revealed that economic activity has generally seen moderate growth since early July, but concerns about energy prices, policy uncertainties, and international conflicts have increased.
According to the report, economic activity grew slightly to moderately in 10 of the Fed’s 12 regions, while two regions saw no significant change. Although consumer spending saw limited growth, it was noted that consumers have become more sensitive to prices. While spending by the upper income group remained strong, automobile sales were under pressure due to weak consumer confidence, high oil prices, and rising financing costs.
Manufacturing showed a recovery in most regions. Some Fed regions reported strong demand, particularly in orders related to defense and data centers.
The report noted a slowdown in labor market growth, with only a limited increase in total employment. While labor demand remained relatively strong in the manufacturing and construction sectors, demand for workers declined in the retail and hospitality sectors.
On the price side, while most regions reported moderate increases, it was emphasized that cost pressures stemming from energy, transportation, and raw material costs, as well as tariffs, continued.
According to the Fed’s field surveys, businesses generally maintain positive expectations regarding the economic outlook. However, the trajectory of energy prices, uncertainties in economic policies, and international conflicts are among the main risk factors for companies in the coming period.
*This is not investment advice.