Federal Reserve Beige Book: U.S. economic activity "slightly" increased, "tariffs and uncertainty" mentioned unusually frequently

On Wednesday, the Federal Reserve stated in its latest released Beige Book report that overall economic activity in the United States has "slightly" increased since mid-January, but businesses across the country reported uncertainty regarding the new policies of the Trump administration, particularly concerning tariffs.Notably, the report released on Wednesday mentioned tariffs 49 times, while "uncertainty" and its variants appeared 47 times.The Beige Book indicated that prices have "moderately" increased in most regions, with several areas reporting a faster pace of price growth compared to the last Beige Book report. Looking ahead, businesses across the U.S. expect potential tariffs on raw materials may force them to raise prices, and there are sporadic reports indicating that some companies have already begun to raise prices in advance.The Beige Book showed mixed employment conditions, with seven regions stating that employment conditions remained unchanged during the reporting period. Several respondents mentioned that uncertainty regarding immigration and other policies is affecting current and future labor demand. Wage growth is at a moderate to moderate level, slightly slowing compared to the last report, with multiple regions reflecting that wage pressures are easing.The Beige Book also noted that demand in the leisure and hospitality sectors has weakened in some areas due to "abnormal weather conditions."Overall, the Beige Book stated that consumer spending is low, with demand for necessities remaining relatively stable, but for non-essentials, especially among low-income consumers, there is greater sensitivity to price changes.This Beige Book was compiled by the Minneapolis Federal Reserve based on information collected through February 24 and includes anecdotes and comments on business conditions across the 12 districts of the Federal Reserve.The Beige Book is one of the economic briefing documents regularly provided to Federal Reserve officials before FOMC policy meetings. The next FOMC meeting is scheduled for March 18-19, and the market generally expects the Federal Reserve to remain on hold and keep interest rates unchanged at the March meeting.In recent weeks, concerns among economists and market participants regarding weak U.S. economic growth have intensified, primarily driven by speculation that tariffs imposed by Trump and other policies, such as deportation and reduced immigration, may suppress the economy.Highlights from Each DistrictHere are the highlights from the Federal Reserve's reports from each district.Minneapolis: A regional recruiter noted that the number of applications for nonprofit executive positions, which used to be around 30, has suddenly ballooned to hundreds.Kansas City: Most businesses reported difficulty passing on increased costs to customers, indicating that potential demand destruction is their main concern. However, business contacts indicated they are more inclined to scale back rather than harm profit margins through price cuts.San Francisco: Some respondents emphasized that high-income households in the region continue to maintain a rapid pace of consumption, with strong demand for luxury goods.Boston: A restaurant industry contact in Massachusetts stated that sales in January 2025 were the weakest for any single month in history, even considering seasonal factors.New York: A shipping industry contact pointed out that although importers are generally concerned about the impact of tariffs and changing trade policies, most are waiting for policy stabilization before making adjustments to procurement or shipping routesRichmond: Some federal employees have been laid off, and several private sector companies have also cut jobs due to reduced or canceled federal funding. A few private companies reported a slowdown in hiring.Atlanta: Many respondents indicated difficulties in pricing and pointed out that cost uncertainty mainly stems from the ambiguity of international trade policies. Most businesses stated that they expect to pass on the majority of the additional costs to customers.Chicago: Many respondents reported that filling positions has not been very difficult. A contact in the retail industry even mentioned that their stack of resumes is piled high to the ceiling