Fed Beige Book Shows Economic Activity Little Changed

Core Insights - The resilience in spending among higher-income consumers is notable, indicating a K-shaped economic recovery, but the overall labor market shows signs of weakness with declining employment [1][2][4] - The Federal Reserve may need to consider an additional rate cut in December due to declining aggregate spending and employment, as well as firms' limited ability to pass on higher input costs [3][4] Economic Indicators - Higher-income consumers are exhibiting resilience in spending, which contrasts with the overall economic aggregates that are declining [2][3] - The Beige Book indicates a moderate rise in prices and widespread input cost pressures among manufacturers and retailers, influenced by tariffs [6] Federal Reserve Policy - The rising unemployment rate and declining employment figures are significant factors for policymakers, potentially leading to a rate cut [4][5] - The Fed is cautious about moving into an accommodative stance despite the pressures from the labor market and inflationary concerns [5][6]