Beige Book: Economic Activity Continues to Expand, Headwind Concerns Growing

Economic activity expanded at a modest to moderate pace across most of the twelve Federal Reserve Districts in mid-October through late November, according to the just-released Federal Reserve Beige Book. Dallas and Philadelphia reported slower growth compared to the prior period. The report was based on information collected through November 26.

The economic expansion over the period was driven in part by continued consumer spending, with an improvement in auto sales. Manufacturing activity continued to grow at a moderate pace in most Districts, but tariffs remain a concern. Commercial real estate construction and leasing rose or held steady, while new home construction and existing home sales declined or remained flat. Agricultural conditions were mixed as impacts from excessive rainfall and tariffs have constrained demand. Businesses generally remained optimistic about the near-term outlook, though contacts cited increased uncertainty from the impacts of tariffs, rising interest rates, and labor market constraints.

Employment growth was on the slower side of modest to moderate in most Districts due to the consequences of labor shortages. Labor markets tightened further, with most Districts reporting widespread shortages across a wide array of sectors. Businesses responded in a variety of ways, including enhancing health benefits, paying bonuses, and increasing vacation allowances.

The higher side of modest to moderate wage growth was seen in most Districts as upward wage pressures continue to persist. Prices increased at a modest pace across most Districts. Contacts reported widespread input price pressures, as cost increases due to tariffs have spread to retailers and restaurants, in addition to manufacturers and contractors.

Read the full Federal Reserve report.