The Fed’s latest Beige Book reported a slight pickup in US economic activity from late May through early July, a modest improvement over the previous edition. Five districts saw slight or modest growth, while five were flat and two reported declines.
However, businesses remain wary, with uncertainty still elevated and the overall outlook described as “neutral to slightly pessimistic.” Only two districts expected any pickup in activity moving forward. Labor conditions remained cautious, with only a very slight increase in employment and modest wage growth.
Price pressures continued to build, described as moderate to modest across districts. Input costs tied to tariffs—particularly in manufacturing and construction—were widely cited, with most businesses facing “modest to pronounced” cost pressures.
A growing number of firms are beginning to pass these higher costs to consumers via price hikes or surcharges. Others, constrained by customer price sensitivity, have opted to absorb the increases, compressing margins. With broad expectations for continued cost pressure in the coming months, the Fed noted that “consumer prices will start to rise more rapidly by late summer”.
