Economic uncertainty and softening demand are prompting more US firms to trim payrolls, according to the Federal Reserve's latest Beige Book survey. Across a dozen districts, companies reported layoffs and slower hiring as they brace for a possible slowdown.
At the same time, the Fed notes that prices have climbed in recent weeks, with business costs rising due to higher import prices and steeper fees for services like insurance and health care. Tariff-induced input cost increases showed up across many regions, though the impact on final prices varied.
In Philadelphia, Fed Chair Jerome Powell warned that a sharp slowdown in hiring could pose a growing risk to the US economy. Officials at the Fed's recent meeting forecast two more rate cuts this year, with a further cut penciled in for 2026.
The first rate cut this year came in September after signs of weakening in the key employment market. Lower borrowing costs could ease expenses for mortgages, auto loans and business credit, but the Fed is treading carefully to keep inflation in check.
Since returning to the White House this year, US President Donald Trump has imposed wide-ranging tariffs on trading partners, fuelling concerns among economists that higher import levies could drive consumer prices up further.
Fed contacts also noted elevated uncertainty and increased investment in artificial intelligence technologies as firms look for efficiency gains. Meanwhile, labor supply in sectors like agriculture, construction and manufacturing was reportedly strained by changes in immigration policies.
With uncertainty expected to weigh on economic activity, all eyes will be on upcoming jobs and inflation reports as the Fed balances its approach to rate cuts and price stability.
Reference(s):
U.S. Fed sees more firms reducing staff on economic uncertainty
cgtn.com
