After being upgraded in the May edition, the Beige Book's economic assessment has slipped back to modest-to-moderate. And tariffs are the reason with manufacturers in all of the Federal Reserve's 12 districts voicing concerns over tariffs with "many" districts reporting higher prices and "many" reporting related supply disruptions. Tariffs are contributing to price increases for metals and lumber with pass through to customers described as moderate to slight.
A lack of available labor, across all 12 districts, is an increasing concern and one that is constraining business expansion. Wage increases, like the general assessment, are described as modest to moderate. Lack of truck drivers was cited in six districts.
Positives are led by consumer spending which is said to "up" in all districts especially Dallas and Richmond. Inflation, despite the tariff-related pressure, is in the modest-to-moderate camp as is employment. Housing is described as soft and commercial real estate unchanged.
The modest-to-moderate overall score applies to 10 districts with Dallas, which is getting a boost from energy, upgraded from solid growth to "strong growth" and with St. Louis unchanged at "slight" growth. The last edition of this report, released in late May, marked the first upgrade in the assessment in more than a year, underscoring what now appear to be emerging tariff-related effects for the economy.
Cut-off date was July 9 for today's report which was compiled by the Boston Fed for the July 31 & August 1 FOMC.