The U.S. economy “remained virtually unchanged” as spending declined and hiring stalled
Inflationary pressures and uncertainty persisted amid rising tariffs and tightening immigration rules, according to the Federal Reserve’s Beige Book report released on Wednesday.
"Three districts reported a slight or moderate increase in activity, five reported no change, and four reported a slight decrease," according to a Fed survey prepared by the San Francisco Federal Reserve Bank based on information collected through October 6.
Almost unchanged economic activity was observed against the backdrop of consumer spending "slightly declining in recent weeks," the report showed. Weak spending was observed in retail trade, although some counties noted higher demand for electric vehicles before the expiration of the federal tax credit.
The employment rate "remained largely stable," and the overall demand for labor was "muted" in all sectors, according to the report. Many businesses continued to reduce their workforce through layoffs or natural attrition, citing weaker demand and a focus on automation as investments in artificial intelligence increased.
Hiring, where it occurred, reflected greater availability of workers, with firms preferring to hire part-time or temporary workers instead of permanent employees. However, labor supply remained limited in the hospitality, agriculture, construction, and manufacturing sectors, which were most affected by the administration's immigration restrictions.
In terms of inflation, prices rose compared to the previous report, with several counties indicating that "resource costs increased at a faster pace due to higher import costs and higher costs of services such as insurance, healthcare, and technology solutions."
Against the backdrop of new tariff concerns related to tensions in trade relations between the United States and China, the report notes "tariff-induced increases in resource costs" in many counties, but warns that "the extent to which these increased costs were passed on to final prices varied."