After the tariff storm, the Federal Reserve's first Beige Book: Little change in economic activity, trade concerns widespread across the U.S

On Wednesday, the Federal Reserve stated in its latest published Beige Book report that the tariff measures introduced by President Trump have recently triggered widespread uncertainty across the United States:

Since the last report, economic activity has changed little, but uncertainty regarding international trade policy is prevalent in all reports.

In the Federal Reserve's latest report, the term "tariff" was mentioned 107 times, more than double the frequency in the previous Beige Book. The words "uncertain" and its variants appeared 89 times. The report noted that as economic uncertainty intensified, particularly regarding tariffs, the outlook in several regions "significantly deteriorated."

This latest version of the Beige Book was compiled by the Atlanta Federal Reserve, with information collected up to or before April 14. The report includes comments and anecdotes about business conditions from the 12 Federal Reserve districts, with information sourced directly from businesses and other contacts. Federal Reserve officials will hold the next FOMC meeting on May 6-7.

Prices generally rose across U.S. regions, with businesses expecting tariffs to lead to increased input costs. Many companies reported that their suppliers had issued notices of rising costs, and most businesses indicated plans to pass higher prices on to consumers. "Businesses reported that they have increased tariff surcharges or shortened pricing cycles to cope with uncertain trade policies."

Trump's tariff plans have changed frequently, creating significant uncertainty for businesses importing products and raw materials. Trump suspended plans to impose so-called "reciprocal tariffs" on dozens of countries but still implemented a uniform 10% tariff. These tariffs were added on top of previous tariffs imposed on steel, aluminum, and automotive imports.

The Beige Book indicated that overall employment in the U.S. remained unchanged or slightly increased. The report noted a decline in government jobs and positions at government-funded agencies. This likely reflects the Trump administration's reduction of federal workforce personnel and cost-cutting measures:

Several regions reported that businesses are taking a wait-and-see approach to hiring, pausing or slowing recruitment until the economic situation becomes clearer. Additionally, sporadic reports indicated that businesses are preparing for layoffs.

The report also mentioned that consumers rushed to purchase vehicles and non-durable goods before tariff-related price increases, while the number of international tourists declined. Furthermore, overall non-automotive consumption decreased.

Highlights from Across the U.S. Regions

Boston: "There has been a noticeable decrease in tourists from Canada, and contacts are concerned that negative reactions to U.S. tariff policies will also reduce tourists from Europe and other countries this summer."

Philadelphia: "One contact stated that they canceled an upcoming price increase plan due to concerns about declining customer demand. Meanwhile, another contact mentioned that many restaurants chose not to participate in the annual local restaurant week promotion due to the inability to bear the costs of menu discounts."

Cleveland: "Several contacts in the food and hospitality industries indicated that reduced foot traffic is related to economic and political uncertainty, and they expect consumers to cut back on spending or turn to more affordable options."

Minneapolis: "The report stated that there are more companies laying off employees than hiring."Kansas City: "In recent weeks, several companies have taken action to enhance liquidity and cash reserves, including expanding credit lines, discounting inventory, and selling long-term assets."

San Francisco: "Due to recent changes in federal policy and a reduction in discretionary and charitable spending by private enterprises, funding from both public and private sectors has declined. The funding shortage has forced some non-profit organizations to cut services and programs and lay off staff."

Atlanta: "Contacts in the lumber and wood products manufacturing industry indicate that demand has slowed due to tariff-related uncertainties. One company expressed complete lack of confidence in forecasts for six consecutive months."

St. Louis: "Some contacts also indicated that due to ongoing uncertainties, they are reluctant to execute original capital investment plans or initiate new ones. A bourbon distillery stated that it is nearly impossible to plan ahead in the face of constantly changing trade rules."