Federal Reserve's Beige Book Report: Signs of Recession in the Economy

Economic Activity at the Border: Fed's October Beige Book Report

The Federal Reserve (Fed) published its "Beige Book" report for October. This comprehensive report was prepared using data from the Fed's 12 districts and provides important insights into the current state of the American economy. Overall, economic activity has not shown much change since the previous report. The report emphasizes that economic activities in 3 districts recorded mild to moderate growth, while activities in 5 districts remained stable. Additionally, a slight slowdown was observed in 4 districts.

Decline in Consumer Spending

The Beige Book report states that consumer spending on retail goods has shown a slight decline in recent weeks. It is emphasized that low- and middle-income households continue to prefer discounts and promotions in the face of rising prices and ongoing economic uncertainties. The differences in manufacturing activities are also noteworthy; the report indicates that many regions are facing difficulties in production conditions due to high tariffs and weakening general demand.

Employment and Labor Demand

While employment levels have remained largely stable in recent weeks, the report notes that demand for labor is weak. In most regions, employers have resorted to reducing the number of employees, including layoffs, due to weak demand and increasing economic uncertainty. Additionally, the growing investments in artificial intelligence technologies are also affecting labor demand.

Price Increases and Input Costs

The report highlights that prices have continued to rise; increases in costs for services such as healthcare and technology solutions, as well as rising import costs, have rapidly escalated input costs. The increases in input costs due to tariffs vary in their reflection on final prices. Some firms are managing to keep tariff-related cost increases largely stable in sales prices in order to maintain market share. However, in the manufacturing and retail sectors, some firms do not hesitate to fully pass on the rising import costs to customers.