Federal Reserve Beige Book: Overall little change in the US economy, employment stabilizing but inflation pressures still present

On Wednesday, the latest Beige Book released by the Federal Reserve showed that economic activity in the United States has remained essentially unchanged in recent weeks, overall employment levels have remained stable, but cost pressures from inflation and tariffs still exist. The report pointed out that overall consumer spending has slightly decreased, and the phenomenon of rising input costs is widespread in multiple regions. The Federal Reserve said, "Reports indicate that rising input costs due to tariffs have been reported in many regions, but the extent to which these higher costs are passed on to final prices varies." Some businesses choose to maintain prices to retain customers, while others pass on the higher import costs to consumers entirely. This report is based on data collected from businesses and economic data in 12 Federal Reserve districts as of October 6, compiled by the San Francisco Fed. Economic activity slightly increased in three major regions, remained flat in five regions, and slightly weakened in four regions. Some businesses expect demand to increase in the next 6 to 12 months, but some regions warn that a prolonged government shutdown will be a drag on economic growth. Currently, Federal Reserve officials are divided on whether to continue cutting interest rates as they need to balance cooling job markets with inflation still above the 2% target. Federal Reserve Chairman Powell said on Tuesday that the central bank may cut rates again later this month and noted that since lowering the benchmark interest rate in September with expectations for two more cuts this year, the economic outlook "has changed little." Futures market data shows that investors widely expect another rate cut at the Federal Reserve's meeting on October 28-29. In terms of employment, most businesses in most regions have reduced their workforce through layoffs or resignations, due to weak demand, rising economic uncertainty, and increased investment in artificial intelligence. While some businesses say hiring has become easier, industries such as hospitality, agriculture, construction, and manufacturing still face shortages of workers. The Beige Book noted, "Changes in immigration policies have limited labor supply in multiple regions in these industries." The report also highlighted specific situations in some regions. Businesses in Philadelphia reported that some suppliers raised prices citing "tariffs," even though their products were not subject to tariffs. A manufacturer in Cleveland said they planned to wait for industrial production to recover before laying off workers, but eventually "could not wait any longer." Businesses in the Atlanta area warned that the price increases triggered by tariffs have just begun and expect prices to continue to rise until 2026. A freight company in Chicago described the current economic environment as "entering a recession." A manufacturing company in Kansas City said that while raw material prices are still high but fluctuations are easing. Employee numbers at energy companies in Dallas continue to decline as companies complete more well operations with fewer workers through technological improvements. In Minneapolis, an advertising company said that the proliferation of artificial intelligence tools has significantly reduced the demand for entry-level positions. The report from the San Francisco area stated that more businesses are closing or reducing operating hours, and loan delinquency rates are rising. Manufacturing, construction, and agricultural businesses in the St. Louis area reflected that some workers are afraid to work for fear of deportation, leading to persistent labor shortages.