Beige Book Blues

By SBE Council at 23 April, 2025, 8:43 pm

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by Raymond J. Keating -

The latest Beige Book report from the Federal Reserve doesn't paint an optimistic picture of the economy.

The April 23 report noted:

"Economic activity was little changed since the previous report [released on March 5], but uncertainty around international trade policy was pervasive across reports. Just five Districts saw slight growth, three Districts noted activity was relatively unchanged, and the remaining four Districts reported slight to modest declines."

Looking at some key points, non-auto consumer spending was down, with increased spending on autos "generally attributed to a rush to purchase ahead of tariff-related price increases."

Leisure and business travel were down, for the most part, with several districts noting a decline in international visitors.

Also, it was noted, "Several Districts saw a deterioration in demand for non-financial services."

Meanwhile, transportation activity "expanded modestly, on balance," and manufacturing ranked as "mixed, but two-thirds of Districts said activity was little changed or had declined."

On the inflation front, the indicators weren't good, but also not unexpected. It was noted that "[p]rices increased across Districts, with six characterizing price growth as modest and six characterizing it as moderate, similar to the previous report."

Related to the tariff tumult, "Most Districts noted that firms expected elevated input cost growth resulting from tariffs. Many firms have already received notices from suppliers that costs would be increasing. Firms reported adding tariff surcharges or shortening pricing horizons to account for uncertain trade policy. Most businesses expected to pass through additional costs to customers."

Interestingly, a glimpse of life was detected on the real-estate front:

"Home sales rose somewhat, and many Districts continued to note low inventory levels. Commercial real estate (CRE) activity expanded slightly as multifamily propped up the industrial and office sectors."

As I've noted before, the Beige Book, based on information from Fed district bank and branch directors, as well as from interviews of business contacts, economists, market observers and others, isn't an exact read on the current state of the economy. However, it is another piece in the economy puzzle and it offers some valuable information.

As for general expectations from the Beige Book, it was reported:

"The outlook in several Districts worsened considerably as economic uncertainty, particularly surrounding tariffs, rose."

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. He is the author of " The Weekly Economist " book series, and 10 Points from Walt Disney on Entrepreneurship .