The US economy is showing signs of stagnation according to the Federal Reserve’s latest Beige Book. Most of the twelve districts report that economic activity remained essentially unchanged as of November 17, while two reported a slowdown and one reported a slight improvement.
US economy in stall, consumption down and costs on the rise
However, across the nation there has been a decline in consumer spending, particularly in the medium-low ranges, with the exception of high-end retail segments, which continue to show resilience. Several operators report a negative impact deriving from the recent federal shutdown and the disappearance of the tax credit for electric vehicles, factors which have slowed down purchases. Tourism also remains substantially stable but with growing caution in discretionary spending. On the production front, manufacturing shows a moderate improvement, but hampered by persistent uncertainty over duties and supply tensions.
US Work
The job market continues to weaken slightly according to the report, with half of the districts reporting decreasing labor demand and an announced increase in layoffs, although many employers prefer to freeze hiring or resort to simply replacing departing staff. Furthermore, many companies are reducing hours worked rather than resorting to staff cuts. The spread of artificial intelligence contributes to slowing down employment in entry-level jobs, especially in the service and customer care sectors. Despite a general improvement in the availability of manpower, difficulties in finding specialized profiles persist. Wage growth remains modest, with stronger pressures in sectors such as manufacturing, construction and healthcare, while rising health insurance costs continue to weigh on total labor costs.
Weak demand is holding back inflation
Businesses report a picture of still moderate but widespread inflation, with rising costs especially in the sectors linked to manufacturing and distribution, which are strongly influenced by tariffs. The increases also affect items such as energy, technology and insurance. In many cases, however, the ability to pass on increases to final prices is limited by weak demand and consumer sensitivity, forcing companies to absorb part of the costs and squeezing margins. However, some inputs recorded price decreases, thanks to weaker demand or the postponement of tariff measures. However, companies’ expectations indicate a persistence of cost pressures in the coming months, with very differentiated pricing strategies depending on the solidity of demand in the respective sectors.
Real estate without direction
The real estate sector offers a heterogeneous picture: residential construction is decreasing in some districts, while in others it remains stable; the home sales market shows mixed trends, with several territories reporting an improvement linked to lower rates and an increase in supply. The office continues to show signs of recovery in some urban areas, supported by return-to-office policies. In the agricultural and energy sectors the situation is overall stable, although agricultural operators are experiencing problems due to the low prices of some raw materials and weak international demand, while in the energy sector critical issues linked to low oil prices persist.
