In anticipation of its upcoming monetary policy meeting later this month, the Federal Reserve released its Beige Book on Wednesday. This report compiles anecdotal evidence on economic conditions across the twelve Federal Reserve districts.
The Beige Book highlighted slight economic growth in three districts. However, the number of districts reporting either stagnant or declining activity increased from five in the prior period to nine in the current period. This rise in districts reporting flat or declining activity is partly due to a downturn in consumer spending, which saw a slight decrease in most districts after having remained steady in the previous reporting period.
Furthermore, the Fed noted a decline in manufacturing activity in most districts, with two districts specifically indicating that these declines were part of ongoing contractions within the sector.
Looking forward, the Beige Book mentioned, "District contacts generally expected economic activity to remain stable or to improve somewhat in the coming months, though contacts in three districts anticipated slight declines."
Employment levels were reported as generally flat to slightly up in recent weeks, with five districts experiencing slight or modest increases in overall headcounts. However, some districts noted that firms adjusted by reducing shifts and hours, leaving advertised positions unfilled, or decreasing headcounts through attrition. Reports of layoffs, however, were rare.
The Beige Book also indicated that prices increased modestly during the most recent reporting period, though three districts reported only slight increases in selling prices.
Typically released two weeks prior to the Federal Reserve’s monetary policy meeting, this edition precedes the meeting scheduled for September 17-18. It is widely expected that the Fed will lower interest rates later this month, although there is ongoing discussion regarding the magnitude of the cut.
According to CME Group's FedWatch Tool, there is currently a 57.0 percent probability of a quarter-point rate cut and a 43.0 percent probability of a half-point rate cut.
