On Wednesday, the Federal Reserve published its most recent Beige Book. Looking ahead, it indicates that economic growth has been “little changed” since the last Beige Book released on March 5. In Tensions Mount, the report acknowledges the general confusion reigning over international trade policy. This intergenerational crisis has rippled through every sector across the Fed’s 12 districts.
The Beige Book shows that many of the federal employees who’ve recently been cut have already felt the pain of recent layoffs. Others have been put on administrative leave. This trend has coincided with the Department of Government Efficiency (DOGE) striving to reduce the federal workforce, resulting in thousands of job losses and buyout offers to others. The deep cuts have wreaked havoc on the Washington, D.C. region. The nation’s employment figures have taken a hit as well.
An aviation-focused research organization based outside the D.C. Meanwhile, a second defense-related consultancy in nearby Northern Virginia has laid off a quarter of its staff after losing half of its federal contracts.
The service sector appears to be experiencing a downturn, with contacts indicating a noticeably worsened outlook and anticipating a sharp decline in activity over the coming months. New York City Reports from mass retailers recently released describe skyrocketing prices on everyday essentials. These span sectors from food, and insurance, to construction materials.
“Most businesses expected to pass through additional costs to customers.” – Federal Reserve’s Beige Book
With the collapse of tourism in New York City, in particular, retail and restaurants are already starting to see the impact. According to tourism reports, visitors are reserving fewer hotel rooms, which continues to drain revenue from the local economy. The Beige Book does point to a huge problem. One Canadian trade group estimates that at least one American technology company has lost $1 billion in business contracts in Canada due to tax tensions.
The report highlights that companies are responding to unpredictable trade policies by passing on costs in the form of tariff surcharges or by reducing pricing horizons. It notes that “uncertainty around international trade policy was pervasive across” all districts surveyed.
“Firms reported adding tariff surcharges or shortening pricing horizons to account for uncertain trade policy.” – Federal Reserve’s Beige Book
Given the state of the economy as described, firms have been vocal about their worries related to increasing input costs caused by tariffs. The report confirms that “most Districts noted that firms expected elevated input cost growth resulting from tariffs.” This trend could lead us to wonder what businesses will do to price in the future and still be competitive.
Food banks in New York are experiencing unprecedented strain. They’ve detailed reductions to both their operating budgets and staff because of the general economic collapse hitting non-profit artistic institutions. Contacts from various community-based organizations have voiced significant concerns regarding federal funding and support for services, which poses challenges for staffing and strategic planning.
“Contacts at non-profits and other community-based organizations expressed significant concern about the future of federal funding and services support.” – Federal Reserve’s Beige Book
Nevertheless, according to this latest Beige Book, most sectors have left employment levels “unchanged” across this reporting period. The picture is decidedly mixed as businesses hunker down in advance of bad effects from tariff policy and the inevitable slowing consumer demand.
The Fed’s Beige Book is released about every seven weeks. It serves as a critical bellwether for understanding economic activity across the country. Businesses are struggling with unpredictability in today’s world. Many are hands-deep in thriftier design, far more sustainable materials sourcing and concrete supply chain tactics for tackling long-term challenges stateside and abroad.