Beige Book finds growing economic, policy uncertainty

All districts reported “hesitancy and a cautious approach to business and household decisions,” according to the Beige Book, which is a summary of current economic conditions across the Fed’s 12 districts.

Manufacturing activity declined slightly. Consumer spending reports were mixed, with most districts reporting slight declines or no change. However, some districts reported increases in spending on items expected to be affected by tariffs.

Reports on bank loan demand and capital spending plans were mixed. Activity at ports was robust, while reports on transportation and warehouse activity in other areas were mixed.

“On balance, the outlook remains slightly pessimistic and uncertain, unchanged relative to the previous report. However, a few district reports indicate the outlook has deteriorated while a few others indicate the outlook has improved,” the report stated.

Prices

Prices rose moderately over the month. All districts indicated higher tariff rates were putting upward pressure on costs and prices. However, respondents’ reactions varied. Some are raising prices, reducing profit margins, and adding temporary fees or surcharges. Those that plan to pass along tariff-related costs expect to do so within three months.

Here’s a snapshot of what some districts are saying:

New York

Economic activity declined modestly amid growing uncertainty. Employment held steady, though demand for workers softened and wage growth slowed. Selling price increases remained moderate, but input prices grew with tariff-induced cost increases. Capital spending plans declined, and the outlook was pessimistic.

Philadelphia

Business activity declined. Employment slipped, despite an uptick in manufacturing sector jobs. Wages increased slightly, and firm price inflation was up moderately. Existing home sales grew slightly, and new home sales declined. Expectations for future growth rose moderately for manufacturers and slightly for nonmanufacturers.

Cleveland

Business activity remained flat in recent weeks, and contacts expected activity to stay that way in the months ahead. Retailers noted a pullback in consumer spending, and manufacturers reported softer orders. Many contacts attributed robust cost increases to tariffs and said that their selling prices increased.

Kansas City

Overall activity declined moderately, driven by lower retail spending, a decline in the demand for single-family homes, and a slight contraction in manufacturing. Businesses indicated they were increasingly cautious about hiring plans and capital expenditures, but employment levels were steady.

Dallas

Economic activity was flat. Nonfinancial services activity held steady. Growth in manufacturing slowed. Loan volumes grew slightly, and the housing market remained subdued. Employment was flat and price pressures held steady except for the tariff-related increases seen in the manufacturing sector. Outlooks generally deteriorated, and tariff uncertainty was making it hard for businesses to plan for the future.

San Francisco

Economic activity slowed slightly. Employment levels were generally stable. Wages rose slightly and prices increased modestly. Retail sales and consumer and business services demand eased. Conditions in manufacturing, agriculture, and real estate markets softened slightly. Activity in the financial services sector was stable.