Federal Reserve policymakers got a fresh snapshot Wednesday of a broadly improving economy, with employment on the rise but not straining wage bills and inflation easing slightly but still delivering an unwelcome sting. The Beige Book, the central bank’s own real-time survey of its 12 regional banks, is the kind of top-down accounting that helps the Fed manage the economy from above while workers and job seekers absorb the fallout below.
The report said contacts generally expected the economy to continue to expand in the coming months, but several districts noted elevated uncertainty in the outlook for fuel costs. That uncertainty matters most for people already squeezed by higher prices, especially when the report also says elevated gasoline prices were hurting many workers’ budgets and that job seekers faced a shrinking number of open positions across a wide range of occupations.
Who Pays First
The Minneapolis Fed said elevated gasoline prices were hurting many workers’ budgets. It also said job seekers faced a shrinking number of open positions across a wide range of occupations. Those looking for work as stockers, nursing assistants, heavy machinery operators or customer service representatives had relatively better odds of finding a job. That’s the labor market in plain terms: fewer openings, tighter choices, and workers forced to chase whatever scraps remain.
The St. Louis Fed said some employers in Memphis reported that they had not increased wages over the past three months despite rising employee requests for raises. So while the report describes employment as rising, the people doing the work still have to ask for more and get told no. The bosses get flexibility. Workers get the bill.
The Beige Book said price growth was the same or slower in all districts compared with the last reporting period. It said expectations for price growth over the coming months varied across districts, with contacts in some expecting inflation to continue at its current pace, while contacts in others expected inflation to slow, in part because of falling fuel prices. Even that modest easing came with a catch: the report said elevated inflation pushed about half of the policymakers at the Fed’s June 16-17 meeting to project at least one rate hike by the end of 2026.
What the Central Bank Sees
The report collects qualitative economic data from all 12 regional Fed banks to give policymakers a real-time read on current conditions. That means the central bank is watching the country through its own network of regional outposts, then turning those observations into the next round of monetary discipline. The people at the bottom don’t vote on the terms. They live them.
Reuters said Kevin Warsh has been silent about his own rate-path view even as he repeatedly promised to restore price stability and said the central bank has the tools to do so. Reuters said he reiterated that commitment in back-to-back appearances before lawmakers in Congress on Tuesday and Wednesday. The language is familiar: restore stability, use the tools, reassure the people who already hold power. The costs, as usual, land elsewhere.
Reuters also said a drop in fuel prices last month due to a preliminary peace agreement between the U.S. and Iran helped cool inflation, but renewed hostilities this month have pushed oil prices back up and reignited inflation concerns. The report said there were far fewer references than in the prior report to the U.S.-Israeli war against Iran, with hostilities in a relative lull during the survey period and energy prices having eased somewhat and some guarded optimism about a resolution to the conflict.
War, Wages, and the Price Tag
The data in the report was collected on or before July 6. The Cleveland Fed said builders anticipated more bidding opportunities in the near term, an expectation which one contact attributed to decreased uncertainty pending a resolution of the conflict in the Middle East. Other contacts cautioned that they expected some of the commodity price pressures arising from the conflict to persist as long as it continued.
Non-labor input costs continued to rise across a variety of industries, including services, construction and manufacturing, and reflected, in part, higher costs for energy, transportation and raw materials. Some contacts tied those cost increases to the conflict in the Middle East; others to tariffs. Consumer prices continued to rise, and a few districts said contacts saw greater price sensitivity among their customers. That’s the squeeze: higher costs at the top of the supply chain, tighter budgets at the checkout line.
The report said the FIFA World Cup was cited about a dozen times as contributing to activity in districts with cities that hosted matches, including Boston, Philadelphia, Miami, New York, Kansas City and cities on the West Coast. The Boston Fed said bars in Greater Boston also saw a marked uptick in beer sales, which they attributed to the World Cup. Even here, the system counts the surge in consumption before it counts the people trying to make rent.
The Beige Book doesn’t hand out relief. It measures the pressure. And in its own careful language, it shows who gets to forecast the economy and who has to survive it.