Weak Jobs Signal in Beige Book Sets Stage for Fed Cut

Julia Coronado, President and Founder at MacroPolicy Perspectives, highlights how gradual labor loosening shifts Fed strategy toward neutrality.

US economic activity was little changed in recent weeks, though overall consumer spending declined further except among higher-end shoppers, the Federal Reserve said.

Employment declined slightly and prices rose moderately, according to the US central bank’s Beige Book survey of regional business contacts released Wednesday.

“Outlooks were largely unchanged overall,” the Fed said. “Some contacts noted an increased risk of slower activity in coming months, while some optimism was noted among manufacturers.”

The report was based on information collected by the Fed’s 12 regional banks through Nov. 17 and compiled by the Federal Reserve Bank of Dallas.

Multiple districts, including New York, Atlanta and Minneapolis, reported that spending among upper-income consumers was resilient, but was flagging for low- and middle-income households.

“Contacts noted that higher-income customers were unconstrained, but ‘customers in the middle to lower end of the financial spectrum are tightening the belt,’ said one contact,” according to the Minneapolis Fed.

Fed policymakers have been divided over whether to hold or lower interest rates at their next meeting in December. The report offered something for officials on both sides of the current policy debate.

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