Federal Reserve's Beige Book Shows High Oil Prices Impacting 12 Districts, Businesses Expect Price Increases

On October 15, the Federal Reserve's latest Beige Book revealed that the U.S. economy continues to grow overall, but most sectors are experiencing sluggish growth. Among the 12 Federal Reserve districts, two reported moderate economic growth, three reported slight growth, four reported minor growth, and three remained essentially flat. The manufacturing sector is performing relatively well, but consumer spending has not changed significantly in most districts, with over half indicating that consumption is primarily driven by high-income households. Regarding inflation, three districts reported strong price increases, eight reported moderate increases, and four indicated that the rate of price increases has accelerated compared to the previous period. All districts have been affected by rising oil prices, with high diesel prices and fuel surcharges pushing costs along the supply chain, while tariffs, insurance, and other commodity prices continue to exert pressure. Some businesses expect prices to rise further in the coming months as existing contracts expire and hedging and delivery contracts are renegotiated. In terms of employment, most districts reported little change in employment levels, but there is still a shortage of skilled and professional workers. Five districts noted that some businesses have reduced their workforce through natural attrition, delayed hiring, or expect to reduce new positions after investing in artificial intelligence to improve productivity. Meanwhile, rising inflation and welfare costs are prompting employees to demand higher wages. The Beige Book indicates that most businesses remain optimistic about the economic outlook for the coming months, but they generally expect limited growth and are continuously affected by energy prices, tariffs, and other uncertainties.

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