US economic activity little changed, employment stable in recent weeks, Fed says By Reuters
Key Takeaways
- U.S. economic activity was little changed and employment was largely stable recently, according to the Fed's Beige Book.
- More businesses reported headcount reductions through layoffs and attrition, citing weaker demand and economic uncertainty.
- Labor supply remained strained in sectors like hospitality, agriculture, and construction due to changes in immigration policies.
- The Beige Book may carry increased weight in Fed deliberations due to a government shutdown delaying official inflation statistics.
- Tariff-induced input cost increases were reported across many districts, but the extent of passing these costs to final prices varied.
The Federal Reserve's latest Beige Book suggested that U.S. economic activity was little changed and employment remained largely stable in recent weeks, although an increasing number of businesses reported reducing headcount via layoffs and attrition. Reasons cited by contacts included weaker demand, elevated economic uncertainty, and increased investment in artificial intelligence technologies. Conversely, labor supply in sectors like hospitality, agriculture, construction, and manufacturing was reportedly strained in several regions due to recent changes in immigration policies. Published before the next rate-setting meeting, the report provides qualitative insight that might be more influential given a government shutdown delayed key official inflation data. While markets anticipate an interest-rate reduction in late October, Fed officials appear closely divided, emphasizing the importance of anecdotal evidence gathered from business and community leaders. The report also noted that while tariff-induced input costs were reported widely, the pass-through to final prices varied, with the mention of 'tariff' decreasing significantly since the previous report.
