Fed reports rising uncertainties on tariff increases in US

Tariffs remained as a concern for manufacturers and economic activities expanded at a modest pace from the middle of October through late November in the US, the Federal Reserve (Fed) said in its latest report, dubbed the Beige Book.

The Beige Book, which offers detailed information on current economic conditions in all of the twelve Fed banks in the US, showed elevated price pressures due to the tariffs and less optimistic outlooks.

Most manufacturers contacted for the survey expressed concern regarding tariffs and potential changes in trade policy, as well as rising interest rates, and labor market constraints. On the other hand, some manufacturers reported higher demand due to subsided import competition.

The report also showed that consumer spending held steady while construction and real estate activities decreased. The slowdown in the construction sector was attributed to rising mortgage rates and tight inventories.

A broad-based softening was seen in retail sector in some of the districts covered by the survey, with some retailers building up stocks in anticipation of higher tariffs on Chinese imports that are set to take effect in 2019.