Beige book shows slight US economic growth as input costs rise
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The news: US economic activity increased slightly between late May and early July, the Federal Reserve said in its Beige Book report.
The report said the survey saw an improvement over the previous report in which half of districts reported at least slight declines.
The numbers: All 12 Fed districts cited price increases, with seven districts characterising them as “moderate” and five as “modest”.
“In all twelve Districts, businesses reported experiencing modest to pronounced input cost pressures related to tariffs, especially for raw materials used in manufacturing and construction,” the report said.
“Many firms passed on at least a portion of cost increases to consumers through price hikes or surcharges,” though some held off “because of customers’ growing price sensitivity,” leading to “compressed profit margins.”
Employment “increased very slightly overall,” and many “expected to postpone major hiring and layoff decisions until uncertainty diminished.”
The context: The Beige Book findings come as the US economy faces heightened policy uncertainty, largely driven by trade tensions under President Donald Trump. The president has issued a wave of tariff demands and extended a key deadline for new duties from 1 July 9 to 1 August.
Businesses are responding cautiously, with many delaying hiring and pricing decisions until there’s more clarity. Despite Trump’s calls for immediate rate cuts, most Fed officials are holding steady, wary that lowering rates now could undermine efforts to control inflation, especially as the highest import duties in decades are expected to lift prices further in coming months.
The source: US Federal Reserve
