‘Beige Book’ Shows An Economy On The Brink Of Trump’s Tariffs

The Federal Reserve’s ‘Beige Book’ report on the economy was shot through with the word “uncertainty” and similar terms, as businesses braced for the impact of President Donald Trump’s widening trade war.

The report, released Wednesday, showed the economy overall was still growing “slightly.” Still, business and civic leaders were “uncertain,” “nervous,” and “worried” about the impact of Trump’s policies, especially the tariffs against Canada, Mexico, and China he imposed Tuesday. Trump’s plans for mass deportations of immigrants were another source of concern, as several business leaders said their employees were skipping work out of fear of deportation.

The beige book was the latest in a series of reports and surveys to show growing anxiety about how tariffs and other Trump policies will affect the economy. Experts say the tariffs could push up the cost of living and slow the economy, and the uncertainty itself could discourage investment and hiring.

“Contacts in most Districts expected potential tariffs on inputs would lead them to raise prices, with isolated reports of firms raising prices preemptively,” the report said.

In the Dallas district, manufacturers were especially nervous. ‘Respondents said the back-and-forth tariff talk has been stressful and that the heightened uncertainty is highly disruptive,” the report said.

In Boston, “Prices increased moderately on average as wholesale food prices spiked, and contacts expressed concerns that tariffs would contribute to more intense pricing pressures moving forward.”

In Philadelphia, ” Employment continued to grow somewhat, although firms were more reluctant to hire amid economic uncertainty.”

Overall, the report painted a picture of an economy in a precarious position amid Trump’s trade war and his moves to rapidly cut federal employees and programs.

“Such changes have created considerable uncertainty for businesses and consumers and pushed up inflation expectations,” Anthony Fonash, an economist at Moody’s Analytics, wrote in a commentary. “Our baseline calls for slower but still solid growth in the coming months. Yet, the economy appears increasingly fragile, especially since asset markets—with their frothy valuations—seem quite vulnerable to a sizable correction.”