Fed Beige Book Reports Flat Growth

By SBE Council at 4 September, 2025, 12:04 pm

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by Raymond J. Keating -

The latest Federal Reserve Beige Book doesn't offer a cheery take on the economy. Indeed, it indicates that the economy has been flat - no growth - since the previous release on July 16.

The Beige Book is a read on economy based on information from Fed district bank and branch directors, and from interviews of business contacts, economists, market observers and others.

It was reported: "Most of the twelve Federal Reserve Districts reported little or no change in economic activity since the prior Beige Book period-the four Districts that differed reported modest growth."

Some key points:

On consumers: "Across Districts, contacts reported flat to declining consumer spending because, for many households, wages were failing to keep up with rising prices. Contacts frequently cited economic uncertainty and tariffs as negative factors."

On employment: "Eleven Districts described little or no net change in overall employment levels, while one District described a modest decline. Seven Districts noted that firms were hesitant to hire workers because of weaker demand or uncertainty."

On prices and costs: "Ten Districts characterized price growth as moderate or modest. The other two Districts described strong input price growth that outpaced moderate or modest selling price growth. Nearly all Districts noted tariff-related price increases, with contacts from many Districts reporting that tariffs were especially impactful on the prices of inputs."

On manufacturing: "Manufacturing firms reported shifting to local supply chains where feasible and often using automation to cut costs."

On retail and hospitality: "Retail and hospitality sectors offered deals and promotions to help price-sensitive consumers stretch their dollars-supporting steady demand from domestic leisure tourists but not offsetting falling demand from international visitors."

On the impact of AI: "The push to deploy AI partly explains the surge of data center construction-a rare strength in commercial real estate noted by the Philadelphia, Cleveland, and Chicago Districts."

There's no getting around the fact that higher tariffs increase costs for domestic businesses (nearly all imports are inputs to domestic firms) and consumers, disrupt supply chains, and create uncertainty. Hopefully, as we move ahead, positive steps on the tax and regulatory front will outweigh these tariff issues.

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 .