Beige Book: Economic Activity Expanding at a Moderate Pace

Economic activity expanded at a moderate or modest pace across the twelve Federal Reserve Districts in late April and early May, according to the just-released Federal Reserve Beige Book. The report was based on information collected through July 9.

The economic expansion over the period was driven in part by a pickup in consumer spending in all Districts. However, manufacturers in all Districts expressed concern about tariffs and in many Districts reported higher prices and supply disruptions due to the new trade policies. Trucking capacity was mentioned as an issue in six Districts, attributing it to a shortage of commercial drivers. Contacts reported slow growth in existing home sales but were not overly concerned about rising interest rates.

Employment growth was modest to moderate on balance in most Districts. Labor markets once again remained tight, and employers in most Districts continued to report greater difficulty attracting and retaining qualified workers. Businesses responded in a variety of ways, including raising pay and increasing compensation packages.

Modest wage growth was seen in most Districts as upward wage pressures continue to persist. Prices increased at a modest to moderate pace across most Districts and several reported a rise in inflation. Contacts reported rising materials costs, especially for fuel, construction materials, freight, and metals. The prices for metals and lumber increased due to tariffs, but the pass-through from input to consumer prices remained slight to moderate.

Read the full Federal Reserve report.