In its periodic “Beige Book” summary of conditions, the central bank noted that “economic activity has declined slightly since the previous report” released April 23.
“All Districts reported elevated levels of economic and policy uncertainty, which have led to hesitancy and a cautious approach to business and household decisions,” the report added.
Some Districts reported layoffs in certain sectors, but these layoffs were not pervasive,” the report said.
On inflation, the report described prices as rising “at a moderate pace.”
In New York specifically, the Fed found “heightened uncertainty” and input prices that “grew strongly with tariff-inducted cost increases.
The U. A. The economy shrank over the last six weeks as hiring slowed and businesses and consumers were concerned about price hikes brought on by tariffs, the Federal Reserve said in a report released Wednesday.
The central bank reported that “economic activity has declined slightly since the previous report” that was published on April 23 in its regular “Beige Book” summary of conditions.
“All Districts reported elevated levels of economic and policy uncertainty, which have led to hesitancy and a cautious approach to business and household decisions,” added the report.
Seven of the Fed’s 12 districts described employment as “flat” despite hiring being “little changed” in the face of lower turnover rates and a general increase in applications.
“Declining overtime and hours worked, hiring pauses, and staff reduction plans were all mentioned by all districts as indicators of a lower labor demand. According to the report, some districts reported layoffs in specific industries, but these layoffs were not widespread.
Regarding inflation, the report stated that prices were increasing “at a moderate pace.”. “,”.
There were numerous reports of contacts anticipating future price and cost increases to be more rapid. According to the report, some districts characterized these anticipated cost increases as “strong, significant, or substantial.”. “All District reports showed that prices and costs were rising as a result of higher tariff rates. “.
Although there were differences in expectations regarding the amount of price increases, some companies stated that they might add “temporary fees or surcharges” or lower their profit margins. “.”.
Within three months, “contacts that plan to pass along tariff-related costs expect to do so,” the report stated.
The study covers a time when the environment surrounding President Donald Trump’s tariffs was changing.
Trump’s announcement in early May that he would loosen so-called reciprocal tariffs against China sparked a rally on Wall Street as investors hoped the duties would not be as severe as first feared. China reciprocated the move.
Still, concerns remain about the inflationary effect and whether slowdowns linked to the tariffs would cause hiring and the economy as a whole to slow.
The number of mentions of tariffs in Thursday’s report was 122, up from 107 in April.
Philadelphia, New York, and Boston all reported a decline in economic activity on a regional level. The districts with the best growth were Chicago, Atlanta, and Richmond.
The Fed observed “heightened uncertainty” and input prices that “grew strongly with tariff-inducted cost increases” in New York in particular. Even though Trump has been working to reduce the federal government payroll, Richmond reported a slight increase in hiring.
