Fed Beige Book Finds Modest Growth but Persistent Price Pressures — Evening Brief – 09.02.26
The U.S. economy expanded modestly in recent weeks, supported by manufacturing, tourism and business lending, but restrained consumer demand and persistent cost pressures pointed to an increasingly uneven growth environment.
Ten of the Federal Reserve’s 12 districts reported slight to moderate growth since early July, while two recorded no change, according to the central bank’s latest Beige Book.
Consumer spending increased slightly overall, although the results were divided by income. Businesses reported greater price sensitivity among many households alongside continued strength in high-end purchases. Auto sales remained subdued amid weak confidence, high fuel prices and rising financing costs, while airlines reported strong demand despite higher fares.
Manufacturing improved across most districts, led partly by defense and data-center orders. Cleveland reported robust manufacturing demand from those industries, while New York cited emerging supply-chain strains in technology and defense.
Nonresidential construction increased, with several districts reporting that data centers accounted for a large share of activity. Residential construction declined.
Employment rose only slightly. Seven districts reported modest or slight gains, while five recorded no change. Demand remained healthy in manufacturing, construction and some services but weakened in retail and hospitality. Skilled tradespeople and technical workers remained difficult to find, contributing to larger wage increases in construction and manufacturing.
Prices increased moderately in eight districts, modestly in two, slightly in one and robustly in St. Louis. Manufacturers and builders reported rising costs for energy, transportation, metals and petrochemicals, along with continued tariff effects. Health care and insurance expenses also remained significant burdens.
Businesses were not always able to pass those increases to customers because of price resistance, potentially squeezing margins.
The report was based on information collected through Aug. 24. The anecdotal findings will help inform officials before the Federal Open Market Committee’s Sept. 15-16 meeting.