Beige Book: Economic Activity Expanding, Tariffs a Concern

Economic activity expanded at a modest to moderate pace across the twelve Federal Reserve Districts in September through mid-October, according to the just-released Federal Reserve Beige Book. The report was based on information collected through October 15.

The economic expansion over the period was driven in part by a continued growth of consumer spending at a modest pace. Manufacturing activity grew at a moderate pace in most Districts, but business contacts reported facing rising materials and shipping costs and concerns over tariffs. Both commercial and residential real estate reports were mixed, with some Districts experiencing rising home prices and low inventory. Agricultural conditions were mixed as rainy weather helped some farmers but damaged crops for others. Businesses generally remained optimistic about the near-term outlook.

Employment growth was modest to moderate on balance in most Districts. Labor markets once again remained tight, with most Districts reporting widespread shortages across a wide array of sectors. A few Districts noted that worker shortages were restraining growth in some sectors. Businesses responded in a variety of ways, including giving signing bonuses, offering flexible work schedules, and increasing vacation allowances.

Modest to moderate 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. Contacts reported widespread input price pressures, particularly in the manufacturing and construction sectors, in part due to tariffs.

Read the full Federal Reserve report.