The US economy shows signs of life—manufacturers humming and service firms busy—but the overall outlook is “neutral to slightly pessimistic” as high import tariffs and policy uncertainty bite, according to the Fed’s latest Beige Book.
Businesses across sectors report elevated cost pressures, with many expecting consumer prices to rise more rapidly by late summer. From auto parts to apparel, higher import duties are squeezing margins and driving up sticker prices.
Employment has ticked up very slightly, but “many contacts expected to postpone major hiring and layoff decisions until uncertainty diminished.” Immigration enforcement and deportations have also strained labor availability in some regions.
Dallas Fed President Lorie Logan says rates will likely stay put longer to keep inflation in check amid tariff-driven price gains. Boston Fed President Susan Collins adds there’s no rush to cut rates, even as some data hint that the overall inflation impact may be softer than feared.
President Trump’s public criticism of Fed Chair Jerome Powell—and his fresh calls for immediate rate cuts—have injected further uncertainty. Rumors of a possible Fed shake-up circulated, though the White House later downplayed any immediate personnel moves.
While a handful of policymakers say they could consider rate cuts as soon as the July 29–30 meeting if the labor market weakens, most central bankers remain cautious. They believe holding rates steady is crucial to preserving hard-won progress against inflation, especially as the highest import duties in decades start to bite.
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Fed: US economy in 'pessimistic' zone amid tariff costs, uncertainty
cgtn.com