Fed's Beige Book Shows Modest Growth and Price Increases

By Jessica Coacci

Overall economic activity increased modestly in the U.S. as consumers felt heightened price sensitivity in their purchases, according to a Federal Reserve report released Wednesday.

Ten of the 12 Fed districts reported growth in the slight to moderate range, according to the Beige Book, which gathers anecdotal information about current economic conditions across the 12 Federal Reserve Districts.

Overall, the general outlook for the coming months was positive, but sentiment remained mixed as uncertainty loomed due to higher energy prices as the conflict in the Middle East continued.

The report also showed signs of the K-shaped economy, where higher-income consumers fare better than lower-income ones. While consumer spending grew slightly on balance, there were reports of "increased price sensitivity on one hand and solid high-end purchases on the other."

Manufacturing activity picked up across most districts. Some highlighted ongoing strength in demand for data center-related orders, amid the artificial intelligence boom. Rising wages were linked to skilled workers in construction and manufacturing.

Prices increased moderately in eight districts, and the report showed businesses facing mounting margin pressures. Input price pressures were elevated in manufacturing and construction across multiple districts, with widespread reports of price increases for energy, transportation, and raw materials.

The report comes ahead of September's interest rate meeting later this month and follows a contentious meeting in July that drew three dissents from regional Fed presidents. Chairman Kevin Warsh delivered a hawkish tone at his debut Jackson Hole speech-noting the central bank may have work to do if inflation doesn't cool in a timely manner.

However, Wednesday's report showed some encouraging signs for inflationary pressures remaining contained. Consumer-facing businesses in a few districts noted that heightened price sensitivity among customers was putting a limit on their ability to pass through input price increases.

More information on price pressures will come on Sept. 11 when the Labor Department releases its consumer-price index.

Write to Jessica Coacci at jessica.coacci@wsj.com

(END) Dow Jones Newswires

September 02, 2026 15:29 ET (19:29 GMT)