With official jobs data unavailable due to the US government shutdown since October 1, markets turned to the Federal Reserve’s Beige Book for a pulse on the economy. It merely confirmed what previous official data showed—tepid business and economic activity that had earlier spurred the Fed to cut interest rates in hopes of jumpstarting a muted labor market.
Economic activity, as anecdotes from the Beige Book suggest, held flat overall.
Three Fed districts reported modest growth, five saw no change, and four noted softening. Consumer spending ticked lower, particularly in retail. An exception: electric vehicle sales surged in some areas ahead of a federal tax credit’s expiry. Luxury travel stayed strong, but middle- and lower-income households pulled back, favoring deals amid economic uncertainty.
The labor picture was subdued. More employers cut staff through layoffs or attrition, citing weak demand and increased investment in AI. Others hired cautiously, leaning on temps and part-timers. Labor shortages remained in hospitality, agriculture, and construction — blamed in part on tighter immigration rules. Wages rose modestly to moderately, while rising healthcare costs added pressure.
Manufacturing was hit hard by tariffs and flagging demand. Agriculture, energy, and transport were also down. Real estate and financial services were mixed, with some lenders buoyed by lower interest rates, while others stayed risk-averse.
Prices rose, driven by higher import and service costs. Tariff-induced input price hikes rippled through supply chains. Some firms passed costs on; others held prices to stay competitive. Slumping demand in some sectors kept prices flat or falling—notably in steel and lumber.
The data further supports expectations of another rate cut at the Fed’s October 29–30 meeting.
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