The Federal Reserve said on Wednesday that the US economy has barely moved in recent weeks, with almost no change in overall business activity.
The Beige Book, which collected input from all 12 Fed districts through November 17, showed that consumer spending declined, and that decline was sharpest among low- and middle-income households, while the rich kept shopping like nothing happened.
“Outlooks were largely unchanged overall,” the report stated, but it also warned that “some contacts noted an increased risk of slower activity in coming months.”
A few manufacturers were a bit more upbeat, but across the board, the picture stayed flat.
Fed split deepens as shutdown delays data
The Minneapolis Fed quoted one business saying, “customers in the middle to lower end of the financial spectrum are tightening the belt,” even as wealthier consumers stayed “unconstrained.”
The New York, Atlanta, and Minneapolis districts all said high earners were still spending, but everyone else was pulling back hard.
That gap in behavior has Fed officials split on what to do next.Some want to keep interest rates steady, others want to cut them.With most national-level data delayed because of the government shutdown that ended November 12, no one has a full picture.
The Fed won’t even have updated jobs or inflation numbers for October and November before its key December meeting.
So now they’re basically playing poker blind. The market has been flipping back and forth, but odds for a rate cut in December jumped to 80% after two Fed officials aligned with Chair Jerome Powell signaled support for easing.
During the shutdown, SNAP benefits were disrupted, pushing more people to food assistance, according to community organizations. Some retailers also said the shutdown directly hurt sales.
Hiring slows, prices rise, workers harder to find
On jobs, businesses aren’t panicking but are definitely slowing things down.Instead of firing people, most districts said employers are using hiring freezes and attrition to manage costs.
Layoff announcements are up, but not across the board. Kansas City reported that most headcount reductions came from people quitting or retiring, not firings.
Wage pressure was called “moderate” in manufacturing, construction, and health care, but companies in places like Philadelphia said they’re being forced to offer higher pay just to compete for fewer workers, thanks to tighter immigration policies.
On the price front, tariffs are still a problem. Manufacturing and retail firms are seeing pressure on input costs. Some said margins are tighter and finances are strained, even while others noted tariff relief or weaker demand brought prices down.
Businesses aren’t sure what to do next. “Looking ahead, contacts largely anticipate upward cost pressures to persist but plans to raise prices in the near term were mixed,” the report said.
Every district had its own story. In Boston, rising beef prices are expected to push menu costs higher soon, though prices haven’t moved yet. A clothing store saw sales plunge after raising prices. In New York, firms couldn’t find enough workers with AI skills. In Philadelphia, restaurants were full but unprofitable. Customers were chasing discounts and burning loyalty points.
Cleveland reported solid demand from AI data center construction, but called the mood a “collective holding of breath.” In Richmond, confidence was so low that people avoided big-ticket purchases. Atlanta said cost-cutting had hit its limit, and companies now plan to raise prices on things people still want.
St. Louis restaurants said regulars now show up two or three times a week instead of daily, and they’re not ordering full meals. In Minneapolis, holiday hiring looks weak. Dallas manufacturers saw raw material costs rise, and San Francisco said poor households are still cutting back on dining, health care, and beauty services—even as richer folks kept spending.
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