US Fed Beige Book: US Economy Cools Slightly, Uncertainty and Tariff Pressures Intensify

According to the US Fed's Beige Book, an economic conditions report released on Wednesday, recent economic activity in the US has declined slightly, indicating that tariffs and heightened uncertainty are having a broad impact on the economy.

The US Fed releases the Beige Book eight times a year, summarizing the findings of 12 regional Federal Reserve Banks on the economic conditions across the US. The report serves as an important reference for the Fed's monetary policy meetings. Fed officials will convene their next interest rate meeting from June 17 to 18.

This edition of the Beige Book was compiled by the Federal Reserve Bank of St. Louis, based on information collected up to May 23.

The report notes that since the previous Beige Book was released on April 23, "economic activity has declined slightly." "All Reserve Districts reported increased levels of economic and policy uncertainty, leading households and businesses to be more hesitant and cautious in their decision-making."

Regarding hiring, the Fed stated in the report that employment conditions in most of its 12 districts showed "relatively small changes," with seven districts describing employment as "flat," while the number of job seekers increased and employee turnover rates declined.

"All districts described a decline in labor demand, including reductions in hours worked and overtime, hiring freezes, and plans for layoffs. Some districts reported layoffs in certain industries, but these were not widespread," the report said.

On inflation, the report noted that prices in the US are "rising at a mild pace."

"Many businesses expect costs and prices to rise at a faster pace in the future. Some districts described these anticipated cost increases as 'strong,' 'significant,' or 'substantial,'" the report wrote. "All districts indicated that higher tariff levels are exerting upward pressure on costs and prices."

However, businesses' expectations for price increases vary, with some indicating that they may respond by reducing profit margins or increasing "temporary fees or surcharges."

Some businesses plan to pass on tariff-related costs to consumers, expecting to complete this transfer within three months.

US President Trump has already imposed tariffs on a large number of imported goods and threatened to implement higher tariffs on major trading partners. This week, he again raised tariffs on steel and aluminum products. The specific form and scope of the final tariffs remain highly uncertain.

In this edition of the Beige Book, the term "tariffs" appeared 122 times, up from 107 times in the previous report, while terms related to "uncertainty" appeared 80 times.

Overall, the economic outlook is described as "slightly pessimistic and uncertain," similar to the previous Beige Book.